The cost of a cyberattack could easily exceed six figures depending on factors such as the severity and scale of the attack, cost of data recovery, and settlements. However, this does not necessarily mean that you should go for the most expensive policy on the market. Instead, to determine the appropriate level of coverage, you need to evaluate your business’s cybersecurity risks and then work with an insurance agent to create a policy that offers adequate coverage.
What Cyber Insurance Covers
The average cost of a data breach in the U.S. currently stands at $4.24 million. It is worth noting that paying such a figure out of pocket can potentially put you out of business. That’s where cyber liability insurance coverage comes in handy. The policy covers the costs emanating from a cyberattack, including:
- Notification costs
- Investigation costs
- Crisis management
- Business interruption expenses
- Rebuilding costs
- Legal expenses
- Fines
- Credit monitoring expenses
Cyber Liability Insurance for an Independent Contractor
Although the federal government exempts independent contractors from carrying first-party cyber insurance coverage, they may need third-party coverage for protection. Additionally, some companies require their independent contractors to have this coverage. Usually, a policy with a $1 million per occurrence limit is enough for an independent contractor.
Cyber Liability Insurance for Your Clients
To reduce your cyber risk, you can also ask your clients to purchase cyber liability insurance or make it mandatory before undertaking high-risk projects. This is particularly important if your clients are other businesses. Typically, insured clients will be less likely to sue your business if a data breach in your enterprise directly affects them. Depending on the size of the risk, any coverage with a limit of $1 million or more will be enough.
Cyber Insurance for a Small Tech Business
Considering they have valuable technology worth stealing, tech companies are among the most common targets for cyberattacks. Therefore, such businesses should carry enough cyber insurance for adequate protection. For instance, for a small tech company that stores the records of only a few thousand clients, a policy with a $1 million aggregate limit and $1 million per occurrence limit will provide enough coverage if the cost per record is about $250. However, those that exclusively handle clients’ data should consider getting more coverage due to increased risk. A good option for a tech business is to bundle cyber liability with a technology errors and omissions policy.
Cost of Coverage
The average cost of cyber liability insurance in the U.S. is $1,745 per year. However, this varies from one insurance company to another. For instance, 39% of small businesses pay less than $1,500 for cyber insurance annually, while 41% pay anything from $1,500 to $3,000. Other factors that determine the cost of cyber insurance include the type of business, state, size of business, size of risk, and amount of coverage.
How We Can Help at Burton A. Harris Insurance Agency
The level of cyber insurance coverage your business needs largely depends on its level of cyber risk exposure. Therefore, when buying cyber insurance coverage, you should work with an expert who can tailor a policy to meet your business’s unique requirements. For more information on how to enhance cybersecurity for your business, contact the experts at Burton A. Harris Insurance Agency today. We’re happy to answer any questions you may have about cyber insurance policies.