5 Reasons to Get Cyber Insurance | Renascence IT

With the rise of cyberattacks often targeting small businesses with limited resources, the significant concern for protecting your online assets becomes evident. It’s been reported that 42% of small businesses have fallen victim to cyber-attacks within the last year, but many lack preparation for such incidents. This vulnerability may have severe financial implications, especially if these businesses lack the resources to bounce back quickly. This is where cyber insurance for small companies proves invaluable by providing necessary protection against costly cyber risks  

What does cyber insurance offer? And who needs cyber insurance? This blog post will explore why every small business should consider it. 

The Benefits of Having Cyber Insurance for Small Businesses 

Small business owners often find recovering from a cyberattack daunting and stressful. However, cyber insurance can make a difference by offering essential financial security and peace of mind.  

Here are a few advantages: 

Legal Protection  

If your company experiences a cyberattack that exposes customer information, it leads to legal implications and significant legal expenses due to the breach incident. Cyber insurance policy usually includes coverage for costs associated with breaches like defense charges and compensations, which can provide financial support for small businesses struggling to afford legal battles

Data Breach Recovery 

Recovering from a data breach goes beyond system fixes; it entails conducting investigations to determine the cause and extent of the breach, promptly informing impacted customers, and providing credit monitoring services. Cyber insurance coverage for small business owners helps cover these costs and prevents financial strain on the company during recovery.  

Ransomware Attack Protection 

Ransomware attacks have been on the rise, causing severe damage. Hackers take control of your data and request a ransom for its release, which can severely disrupt business operations. Having cyber insurance in place can assist in covering the ransom amount and the expenses incurred in recovering the data to facilitate a recovery for businesses.  

Business Interruption Compensation

Cyber breaches frequently result in extended periods of inactivity that prevent businesses from functioning. A cyber insurance policy reimburses income lost during these disruptions, allowing enterprises to endure challenges without facing potential financial risks. 

These advantages make cyber insurance worth it for small businesses, as it helps avoid financial setbacks that might otherwise lead to the closure of a company.  

What Does a Cyber Insurance Policy Cover? 

Knowing what is included in a cyber insurance policy is essential for making an informed decision, as it usually consists of the following: 

• Data Breaches: Coverage includes protection for expenses related to a data breach, such as customer notification, conducting investigations, and legal costs.  

• Business Interruption: Compensation for lost revenue during a cyberattack-related downtime is called Business Interruption coverage.  

• Legal Liabilities: Protection from lawsuits from compromising customer information such as defense expenses and resolving disputes.  

When it comes to cyber insurance, customizing your policy to match your requirements is essential. For instance, companies dealing with a lot of information might require increased coverage limits to recover from data breaches. Collaborating with IT consultants can help businesses evaluate their vulnerabilities and tailor their policies to suit their needs. This way, the insurance coverage aligns with the company’s characteristics and offers sufficient protection.  

Why Cyber Insurance Is a Smart Investment for Small Businesses 

Investment in cyber insurance goes beyond safeguarding your assets. It’s also about securing your business’s future, making it a wise choice for business owners. 

Increasing Cyberattacks on Small Businesses 

Earlier observations indicate that 42% of businesses encountered cyberattacks within a year alone. Despite 72% having adopted various cybersecurity measures, many are still at risk due to limited resources. The average cyber insurance claim for small to medium enterprises amounts to $345,000, a sum that could potentially harm a small business lacking insurance coverage.  

Rising Costs of Cyberattacks 

The expenses related to cyberattacks have surged significantly, as seen in the rise in cyber insurance claims and payouts over the three years by 100% and 200%, respectively. In 2021, there were 8,100 claims reflecting the increasing frequency of cyber incidents. Cyber insurance examples from real-world cases show that companies with coverage are more prepared to bounce from these occurrences.  

Growing Cybersecurity Insurance Market 

The worldwide cybersecurity insurance market reached a value of $7.60 billion in 2021 and is estimated to reach $20.43 billion by 2027, reflecting the growing awareness of the importance of cyber insurance and why companies are integrating it into their risk management plans.  

By getting cyber insurance coverage, small companies ensure they have the backing to handle any cyber risks that could disrupt their business operations.  

Choosing the Right Cyber Insurance Policy for Your Business 

Choosing the right cyber insurance policy might seem challenging. However, it is essential to safeguard your business against potential risks and threats. Here are some suggestions to help you navigate this decision-making process effectively: 

 Evaluate Coverage Limits: Check the coverage limits to ensure they sufficiently address any costs arising from data breaches, ransomware incidents, and disruptions to business operations.  

1. Consider Exclusions: Understand the exclusions listed in the policy to prevent any issues when filing a claim. 
2. Compare Providers: When choosing insurance providers, it’s essential to compare the options as they offer protection and coverage tailored to your needs. 
3. Leverage Managed IT Services: Integrating the benefits of managed IT services with your cyber insurance strategy can enhance your overall cybersecurity posture. Managed IT services can help evaluate risks and suggest coverage to safeguard your business from threats. 

Conclusion 

Cyber insurance is becoming more critical for small businesses to consider in order to protect themselves against cyber threats, such as expenses related to data breaches or business disruptions, which are increasingly common and costly. This could significantly impact their financial stability in the long run. Small businesses must use the right cyber insurance policy to safeguard their financial future. 

As a business owner, evaluating your cybersecurity risks and ensuring you have more protection in place now than ever is essential. Reach out to Renascence IT Consulting for cyber security and insurance options designed to safeguard your business against online threats.