Why Small Businesses Need Cyber Liability Insurance in CA?

In 2021, Hiscox reported that companies with fewer than 250 employees incurred roughly $25,000 in cyberattack losses, on average. Many small businesses are unable to recover from such a huge loss. With cyber liability insurance in CA, you can protect your company against financial losses resulting from data breaches, network hacking, denial of service (DoS), or ransomware attacks. Here’s a look at cybersecurity policies and their benefits for small businesses.

3 Types of Cybersecurity Coverage

  • First-party coverage: After suffering a cyber-attack, this policy can pay for the cost of probing the incident, assessing future data breach risks, ransomware payments, and lost earnings due to operational interruptions.
  • Liability policy: This coverage kicks in when a cyberattack on your business impacts your clients. It covers your legal fees (including your attorney), court-awarded damages, settlements, and non-compliance penalties.
  • Technology errors and omissions (E&O): Tech E&O covers tech firms for errors that result in cyber-attacks on their clients’ computer systems.

Businesses That You Need Cyber Insurance in CA

Your business is an ideal candidate for cyber insurance if it stores sensitive data in the cloud or on-premises. Such data can include Social Security numbers and credit card numbers, which increase your risk of a cyberattack. Coverage is even more crucial if you have a large customer base. Without insurance, you’d suffer significant losses paying for regulatory fines and customer notifications after a massive data breach. Also, invest in proper coverage to minimize your financial risk if you’re a high-revenue company with valuable assets and data.

Typical Cyber Insurance Exclusions

Neither cyber liability insurance in CA nor first-party coverage pays for the following losses after a cyberattack:

  • Damaged hardware, such as a destroyed hard drive
  • Intellectual property theft (and any resulting loss of revenue)
  • Self-inflicted cybersecurity incidents or insured’s criminal acts that result in a data breach
  • Preventive cybersecurity upgrades and measures, such as cybersecurity training at your workplace or adopting a more secure virtual private network (VPN)

Where to Find Cyber Insurance?

Your business owner’s policy may not always provide adequate cyber insurance coverage. For maximum protection, consider engaging a reputable insurance agent for help finding an appropriate stand-alone policy. Some cybersecurity policies include tech E&O coverage in the package, while in others, you have to purchase the extra protection as an endorsement.

Determining Your Cyber Insurance Coverage Needs

After suffering a cyber-attack without insurance, you may face the possibility of losing your company altogether. Many small businesses never come back if attacked without adequate coverage. To reduce your risk of financial loss, it’s important that you estimate your coverage needs and invest in proper protection.

If you’re like most small businesses, you may purchase about $1 million in cyber insurance, which covers most types of cyber incidents and risks. However, cyber risks can vary based on the type of business, industry, and many other factors. A thorough evaluation of your business with the help of an agent can determine your specific coverage needs.

Knight Insurance Can Help Cover Your Losses in Case of Cyber-Attack

Cyber liability insurance in CA isn’t always cheap, but it can cover the high cost of recovering your data or unlocking your computer systems after a ransomware attack. For more information on how to protect your small business against cyber incidents, contact the experts at Knight Insurance Services. We are happy to help you assess your data breach risks and find the right coverage for your unique needs.

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