Is Cyber Insurance Necessary for Small Businesses?

Unfortunately, small and medium-sized businesses (SMBs) are an easy target for cyber attacks as they often lack the resources that large corporations have to fully secure their operations. Which makes SMBs easy prey for hackers. 43% of data breaches target SMBs. Data breaches and other cyber attacks will cripple your small business, as they can lead to reputational damage, financial ruin and even close your business. The cyber threat landscape is daunting, but luckily there are ways any size or type of businesses can protect themselves. Cyber insurance is a vital risk management tool as it offers financial protection against the costs associated with data breaches, business interruptions and regulatory fines stemming from cyberattacks. While an extremely important investment for your business, navigating the complexities of cyber insurance can be tricky

The Hurdles of Cyber Insurance for SMBs 

Cyber insurance is a relatively unheard-of type of coverage for SMBs, and many who do know of it are not aware of the critical role cyber insurance plays in their security strategy. Along with that, SMBs have a hard time deciding which type of coverage is right for your business. 

Cyber insurance companies also require you to accurately assess the risk of your SMB. Insurance companies require a clear idea of an organization’s vulnerabilities, this way they can help you determine the coverage needed and the price associated with that. Most SMBs have limited IT resources, making the risk assessment task daunting.  Lastly, the cyber threat landscape is always adapting, making the data less reliable for insurers. Is there anyone who can help make this cyber coverage process smoother for both SMBs and insurers?

How Managed Service Providers Can Bridge the Gap

The answer to your question is managed service providers (MSPs). When you partner with an MSP (like us), we help overcome these challenges and secure the cyber insurance you need.  MSPs specialize in managing and enhancing your overall cybersecurity and help you decide what cyber defense policy you need.

Types of Cyber Insurance

There are two main types of cyber insurance policies your business may need. You may need just one type, or a combination depending on the following:

• The size of your business
• Your industry 
• The data your business stores
• Regulatory compliance requirements

The type, coverage amount and whether you need one or both types really depends on your specific business. A good MSP can help guide you during the decision-making process. They can help you look through quotes and contracts to ensure you are getting the plan that suits your needs best. 

First-party cyber coverage protects your business from the financial loss it suffers due to the cyberattack, which covers expenses from:

• Data recovery 
• Lost revenue from interruptions in business operations
• Forensic investigation
• Credit monitoring for affected parties
• Public relations and reputation management 
• Legal fees (depends on the insurer)

Third-party liability cyber insurance coverage helps protect your business from legal claims whose data was compromised in your systems. The coverage generally includes lawsuit defense costs and court awards and settlements. 

Requirements for Cyber Insurance

Companies do not want to work with SMBs or large companies that aren’t proactively protecting themselves.  The requirements depend on each insurance company but generally require your business:

• Implement strong password policies and multi-factor authentication
• Conduct regular cybersecurity training sessions 
• Back up customer and company data regularly 
• Have business continuity plans in place 

These are all things your MSP can help you achieve, so you have one less thing on your plate. When you are proactive and combine cybersecurity measures and cyber insurance you significantly reduce the risk of attacks. 

Ready to Take Action?

Don’t put off investing in cyber insurance because it is too complicated, you need to proactively safeguard your business. Book a meeting with us today, we can discuss your cybersecurity needs, and how we can help you find the right cyber insurance policy.