Is insurance prepared for cyber crime incidents?
Is your business prepared with insurance for cyber crimes? Cyber crimes target devices connected to the internet, such as computers and smartphones.
The motives behind these criminal activities can range from extorting money, stealing important company information, or simply for the hacker's sense of achievement. Cyber attacks are becoming more sophisticated globally, and the resulting damages are increasingly substantial. The COVID-19 pandemic has accelerated digital transformation, significantly contributing to the rise in cyber crimes.
The cyber insurance market is expected to reach $36 Billion by 2028. Despite this growth, 64% of small businesses are not well-informed about cyber insurance, and only 17% have subscribed to it.
Why do small businesses hesitate to consider cyber insurance? Here are five misconceptions and their clarifications:.Misconception 1: My small business is safe from cyber crimes.
Many believe that cyber crimes only target government agencies or large corporations, assuming these entities are attractive targets due to their vast information and supposedly impeccable security programs. Contrarily, small businesses, despite possessing less digital information, become appealing targets for cyber secriminals due to weaker security measures, making them low-hanging fruits for attacks.
Misconception 2: My business doesn't rely much on technology, so it's safe from cyber crimes.
Technology use isn't limited to complex systems; it includes everyday tools like emails, texts, and online banking. Effective communication with customers and efficient business operations necessitate internet use. One common cyber crime method is phishing, which tricks victims into divulging sensitive information through seemingly legitimate emails or texts. Small businesses are not immune to such attacks.
Misconception 3: My business is safe because we have data security programs installed.
Installing data security software or using cloud vendors is just the first step; these measures alone cannot guarantee safety from cyber crimes. No security program offers 100% protection. Optimal protection requires a combination of security measures and cyber insurance, similar to installing alarms and sprinklers for theft and fire protection while also having business insurance for potential damages.
Misconception 4: My business insurance includes cyber coverage.
Cyber insurance is not automatically included in standard business insurance policies. There are two ways to obtain cyber insurance: adding it to a business insurance policy (Endorsement) or subscribing to a standalone cyber insurance policy. Endorsements might be cheaper but often lack comprehensive coverage needed for incidents like business income compensation, ransomware, and fund transfer fraud. Thus, a standalone policy is recommended.
Misconception 5: Cyber insurance is too expensive.
The costs of a cybercrime can be devastating, including legal fees, data breach notifications, fines, and loss of business income. Compared to the potential damages, the cost of cyber insurance, which can range from $350 to $3,000 annually, is relatively minor. This expense is a necessary operational cost and is tax-deductible like other business insurance expenses. Given the frequency and severity of cybercrimes, obtaining cyber insurance is imperative and should not be delayed. The occurrence of cyber crimes in small businesses is not a matter of "if" but "when."
