Why Businesses Need Cyber Liability Insurance Now More than EverJuly 9, 2020
New technologies, big changes, global pandemics, etc. all necessitate the alteration of business practices for many small business owners in various and numerous economic sectors. One of the main changes to business operations in 2020 is that many small businesses have begun to look for ways to keep their business open and operational in some capacity while remaining compliant with governmental orders and managing risk in a pandemic. In addition to other changes, this has also resulted in more reasons why businesses need cyber liability insurance.
2 Growing Cyber Liabilities to Small Businesses
Many businesses were already shifting to a more remote workforce and consumer activity online has been only increasing since the inception of the internet. So, an increase in remote work stations and online transactions has already been happening.
However, there has been an unprecedented and massive shift toward this way of conducting business, and it occurred over a very short time. This has created is a smorgasbord of opportunities for “bad actors and exploitation-ists” on the web, which only increases cyber liability risks for businesses and adds to the reasons why businesses need cyber liability insurance now more than ever.
1. Remote Work Stations
More people working from home means more exposure to cyber liability threats to your small business. Your network at the office may have secure firewalls and extra security protocols in place to ward off malware and ransomware. However, these controls are harder to put in place when workers are operating from less secure in-home networks.
If employees are accessing sensitive customer financial information from remote work stations, it is important to establish these connections through secure networks. Setting employees up with VPNs (Virtual Private Networks) is a good risk management practice.
Hopefully, if you maintain this type of customer data, you have already considered and purchased cyber liability insurance. Given the current circumstances and the new nature of business operations, an increase in your liability limit could be warranted to make sure you have adequate coverage.
2. Electronic Transactions
As consumer habits have shifted, more businesses are engaged in electronic transactions. Perhaps your business did not take electronic forms of payment before the pandemic occurred, but you’ve deemed it necessary in the present time in order to sustainably continue your operations.
Perhaps you’ve established online ordering via your website, or through a third-party vendor, and either ship products or make them available for curbside pick-up. Perhaps you installed a credit card reader at your small business to reduce the amount of cash transactions.
Once you begin to take electronic transactions, it is important to add cyber liability coverage to your insurance portfolio. Even if the transaction is conducted through a 3rd party service provider and you do not maintain customer financial information, as the company who initiated the transaction, you can be drawn into a data breach lawsuit, should one occur. This is one of the reasons why both established businesses and startups need cyber liability coverage.
Additionally, a greater number of customers paying electronically creates a greater number of transactions, which increases your cyber liability exposure and may require that you reevaluate your cyber liability insurance limits to determine if your amount of coverage is still adequate given the change in nature of your business transactions.
It’s important to take cybersecurity seriously. Most small businesses shutter their doors within one year of a cyber breach. Protecting businesses from these risks are why businesses need cyber liability insurance. As your business operations change with the external factors that have been thrust upon the global economy, it is imperative that you review your insurance coverages to ensure that your policy is still providing you with the financial protections that are needed to sustain your small business and livelihood following a loss.
If you have any questions pertaining to cyber liability insurance or would like to receive a coverage quote, one of our experienced commercial lines agents can assist you. Give us a call at 1-800-537-6880 or 717-665-2283.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.