A 2018 survey by Wombat Security found that more than 70% of the surveyed small and medium enterprises (SMBs) had suffered a phishing attack the previous year, 2017. On average, a startup requires about $120,000 to recover from an internet-based attack, says Kaspersky Labs. Unfortunately, with small businesses increasingly integrating information technology into their operation, it is virtually impossible to eliminate the cybersecurity threats in this space. This is where cyber insurance for startups comes in handy, especially because traditional commercial insurance policies typically exclude cybersecurity risks. Read on to understand why your startup needs cyber insurance.
Cyber Insurance for Startups – An Overview
Otherwise known as cyber risk insurance, cybersecurity insurance for startups is basically a type of insurance policy that allows small businesses to transfer the costs associated with the recovery from a data breach or other forms of cybersecurity threats. With the growing number of cybercrimes, this type of insurance is becoming increasingly popular. More precisely, by the end of 2019, the cyber insurance premiums worldwide topped the $5 billion mark and are on course to hit the $20 billion mark by 2025, according to the P&S Research. In terms of cost, the cost of cyber insurance for startups typically ranges anywhere from $750 to $8,000, depending on the available features.
Cyber Insurance for Startups – Scope of Coverage
If cybercriminals steal or expose your customers’ private data, such as bank account information and social security numbers, your cybersecurity insurance for startups policy will pay for the following items:
• Notification Costs – In the event of a data breach, notification costs can add up quickly. This is because your small business will be responsible for not only identifying the potential victims of the data breach, which may require an internal investigation but also notifying the affected parties of the data breach.
• Credit monitoring – If cybercriminals manage to expose or steal your customers’ data, your cyber liability insurance provider will likely monitor the victims’ credit to ensure they do not become victims of criminal identity theft. Without such a policy, your startup may be unable to perform effective credit monitoring, especially if regulators order you to provide a certain kind of credit monitoring. In fact, a recent study by Experian Data Breach Resolution found that nearly 60% of the surveyed consumers want businesses to provide credit monitoring and identify theft protection after a data breach.
• Civil Damages – Some of the victims of a data breach may decide to sue your startup for damages, which can amount to hundreds of thousands of dollars. If you do not have cyber liability insurance for startups to help you compensate the aggrieved parties, such a lawsuit can easily drive you and your startup into financial ruin.
Cybercriminals can easily drive your startup to financial ruin. Fortunately, cybersecurity insurance for startups can help you mitigate the impact of cybersecurity risks. To get a quote for cyber liability insurance for startups, call CF&P Insurance Brokers today at (925) 956-7700.