Running a small or midsize enterprise (SME) is not a mean feat despite the relatively smaller scale of operations. As a business owner, you may struggle with money and resource constraints more often than you imagine. Embracing a savvy mindset can keep your enterprise afloat, but cutting corners in some areas may cause more harm than good.
Business insurance is an element most entrepreneurs consider an unnecessary burden, but it can be a lifesaver. While you may realize the significance of commercial liability coverage, cyber liability insurance might not be on your coverage wishlist. But SMEs need it as much as big enterprises because they are equally prone to cyber risks.
Surveys reveal that 43% of cyber attacks target SMEs, which is surely a reason to worry. Even worse, 60% of small enterprises go out of business within six months after falling prey to an attack. Another survey shows that cybercrime costs SMEs more than $2.2 million each year. These scary numbers make a good reason to build your defenses.
But attacks may happen despite the best defenses, so getting coverage with cyber liability insurance is a wise move. You may have qualms about buying a policy, considering your budget constraints. We have some valid reasons why you shouldn’t cringe at this essential investment.
SMEs Are Soft Targets for Attackers
Almost half of the cyberattacks in the US target SMEs, but only 15% of these enterprises have their defenses in place. Phishing and social engineering are the most common threats. Remote work risks, stolen devices, insider threats, identity theft, and password hacking also abound. SMEs spend thousands dealing with the aftermath of such incidents.
While you can create robust defenses to avert these threats, keeping pace with hackers is challenging because they always seem a step ahead. Buying a cyber liability insurance policy gives you peace of mind because it can help you recover financially from an attack.
Cyber Insurance Offers Extensive Coverage
Nationwide claims data shows that the average recovery time for an organization after an attack is 279 days, which translates into massive losses. Cyber claims can range between $15,000 and $25,000 as recovery costs. Clearly, SMEs must invest in an insurance policy to stay afloat amid the crisis.
As you buy cyber liability insurance for your small business, you need to understand the coverage it provides. Most policies cover first-party cost and expense, third-party liability, data loss, recovery and recreation, cyber extortion, business interruption, and fraudulent funds transfer. Some elements, such as sales losses, property damage, lost equipment, and business reputation damage, may not be covered by the policy.
According to Connected Risk Solutions, cyber insurance continues to evolve, with security threats growing in severity. Business owners must pay close attention to what their policy covers and what it excludes to be ready for the worst-case scenario. You can discuss coverage options and costs with the provider for the best deal.
Essential for Regulatory Compliance
Cyber liability insurance does more than provide a cushion for your SME in the event of an attack. It may also be essential for regulatory compliance. State regulations may require your organization to notify clients if a data breach entails the loss of their personal information. You can imagine the cost and effort of sending notifications to hundreds or thousands of customers.
Even small businesses hold the information of a large group of customers and are responsible for safeguarding it. With cyber insurance in place, you can comply with the regulations and bear the costs of such notifications. You may even buy a policy that covers the cost of remedial measures, such as providing credit monitoring to impacted clients.
Resilience Makes Coverage Affordable
The ever-increasing threat of cyberattacks makes cyber liability coverage essential for all businesses, regardless of the costs. The good thing is that resilience can make it affordable even for SMEs on tight budgets.
Insurers check factors such as cyber risk exposure and defense measures for pricing decisions regarding the policies. SMEs can get a viable deal by addressing the signals that negatively impact their security posture. For example, having a proper cybersecurity policy can get you appropriate cyber insurance without spending a fortune.
Summing Up
Cyber risks are a real threat for SMEs in the current times. While implementing a defense strategy can lower the risk, an unexpected attack may still happen. A cyber liability insurance policy offers a safety net in such circumstances. Small and midsize businesses must definitely invest in it, despite the expense. The best part is that being security-savvy can make it affordable, so there is hardly a reason to skimp on coverage.
