With the number of cyberattacks on businesses increasing exponentially in recent years, an increasing number of businesses are considering purchasing Cyber Risk Insurance, which explicitly covers losses in the event of a cyberattack.
Many small businesses avoided purchasing this type of insurance for a long time, believing that cybercriminals only targeted large corporations. However, as more black-hat hackers migrate downstream to what they perceive to be easier pickings, small businesses must consider whether this type of risk protection is necessary, and how it might help.
With the prevalence of malware, ransomware, and cybercrime on the rise, more and more businesses are turning to cyber insurance to protect themselves from the financial costs associated with digital threats like these.
In this article, we’ll look at cyber risk Insurance for small businesses in the UK, the different types of coverage available, and the cyber insurance requirements your business must meet in order to qualify for a policy.
What Is Cyber Risk Insurance for Small Businesses?
Cyber risk insurance, also known as cyber liability insurance, protects businesses from damages and liabilities caused by hacks, malware attacks, or data breaches. There is no clear standard for what a cyber insurance policy must and must not include because it is a relatively new branch of the insurance industry.
Policies typically cover costs directly associated with a security breach, such as documenting and investigating the attack, data recovery and hardware repairs, notifying consumers and regulatory agencies, crisis management and public relations damage control, and so on.
Depending on your provider, cyber risk insurance plans may also include additional first-party and third-party coverage, such as paying for your company’s lost income or covering fines, legal fees, and settlements resulting from a breach.
Why get Cyber risk Insurance for your small business?
When it comes to insurance coverage for their business, cyber risk insurance may not be the first thing that comes to mind for a business owner. However, a quick glance at the news demonstrates the growing threat of cyber attacks, ransomware, and data breaches on businesses of all sizes across the United Kingdom, not just big-name corporations.
Consider the following potential threats to your business:
- The disclosure of confidential client information
- Data security has been jeopardized as a result of employee errors.
- Identity theft, computer viruses, and phishing scams are all examples of scams.
Any of these cyberattacks can be disastrous to a small business. As if that weren’t bad enough, hackers can also steal a company’s money and ruin the owner’s credit.
Who Needs Cyber Risk Insurance?
A cyber insurance policy can help any business. For example, businesses that sell online — a process that involves maintaining and storing sensitive data such as personally identifiable information, credit card numbers, and contact information — should consider implementing a policy, because a breach could result in lost sales, irate customers, and other negative consequences down the road.
Aside from e-commerce companies, if your company stores and manages any type of data online, a cyber liability insurance policy provides an extra layer of protection in the event of a data breach.
Common cybercrimes that necessitates cyber risk insurance
Unfortunately, cybercrime affects a large number of small businesses. Below are common examples:
- Malware
- Hacking
- Ransomware
Malware
A type of malicious software that can infiltrate your systems through phishing scams and software vulnerabilities. Once installed, the attacker has the ability to spy on online activities and steal private information.
Hacking
The term “cyber hacking” refers to the partial or complete acquisition of a computer system or specific functions within it. There are various methods for doing so, but the goal is generally to gain access to critical data.
Ransomware
This is a type of malware that infects your computer and encrypts data. In exchange for the data’s return, the attacker will demand a ransom payment. As a precaution, you should create a data recovery plan and keep at least one backup of your data.
Cyber Risk Insurance Coverage
Below is the most common cyber risk insurance coverage:
- Privacy Liability Coverage
- Network Security Coverage
- Media Liability Coverage
- Network Business Interruption Coverage
Privacy Liability Coverage
Privacy liability coverage is critical for businesses that face privacy or information risks. Employee and customer information is highly sensitive, and data breaches that expose this data endanger the safety of your customers and employees while also exposing your company to liability.
This cyber risk insurance overage protects your company from liabilities in the event of a violation of privacy laws or a cyber incident.
Network Security Coverage
Most businesses’ cybersecurity insurance policies should include network security coverage. You should have network security coverage if you want to protect your company’s privacy and information. This cyber insurance will protect your company if your network security fails.
Network security failures include:
- Business email compromises
- Cyber extortion demands
- Data breaches
- Malware infections
- Ransomware
The network security coverage will cover your first-party costs. First-party costs for network coverage include:
- Breach notification to customers
- Credit monitoring
- Data restoration
- Establishing a call center
- Expertise in public relations
- Identity restoration
- IT forensics
- Legal expenses
- Payment and negotiation costs from a ransomware demand
Media Liability Coverage
Except for patent infringement, media liability coverage protects you from intellectual property infringement. This coverage typically extends to both printed and online advertising, as well as your company’s social media posts.
Include media liability coverage in your cybersecurity insurance policy to protect your company’s intellectual property.
Network Business Interruption Coverage
If your business relies on technology to function, you should include network business interruption coverage in your cyber risk insurance policy to protect it from operational cyber risk.
How to get cyber risk insurance in the UK
The top providers for cyber insurance in the United Kingdom are listed below:
- AIG
- Allianz
- Beazley
- Direct Line
- Hiscox
- Markel
- Zurich
AIG
AIG is a global insurance company with offices in over 80 countries around the world. Its cyber security insurance is regarded as one of the best on the market. Their adaptable CyberEdge cover allows business owners to choose exactly what they want to be covered for, so you don’t have to pay for coverage you don’t think you need.
Allianz
Allianz Global Corporate & Specialty has a long history of providing cyber insurance to organizations in order to protect them from cybercrime and digital threats. They provide a variety of cyber insurance products, ranging from specialized, standalone cyber insurance to dedicated cyber risk coverage in standard property and casualty policies.
The risks covered include first-party losses (such as business interruption, restoration, and crisis communications) as well as third-party losses (e.g. data breaches, network interruption, and notification expenses). Cyber insurance, on the other hand, provides much more than just compensation for potentially significant financial losses.
Beazley
Beazley focuses on simplifying the often complex world of cyber risk insurance and providing valuable resources to its customers to help them avoid breaches entirely.
When things go wrong, Beazley’s specialized “Beazley Breach Response (BBR)” team is on hand to assist their clients in effectively managing the aftermath of a data breach, reducing the likelihood of a non-expert mishandling the situation. This personalized approach to cyber breaches is not yet common on the market, and it is unquestionably a selling point for the Beazley product.
Direct Line
Direct Line, one of the UK’s most well-known generalist insurers, offers cyber insurance for those looking for a no-frills solution to cyber security. They’ll cover most markets (with the exception of a few particularly niche ones, which are probably better suited to a specialist) and have an impressive 4.3-star rating on Trustpilot, with nearly 7,000 reviews.
Direct Line’s policy limit of £100,000 is significantly lower than that of many of its competitors, but if you’re a smaller business looking for a reputable provider to help you recover financially after a data breach, Direct Line is well worth considering.
Hiscox
Hiscox, one of the UK’s leading general insurance that provides cyber risk insurance providers, a popular choice with cyber insurance customers due to its exceptional sign-up process (you can get a quote online in a few minutes) and market-leading cyber product
However, Hiscox’s policy limits may be on the low side, but there are few better options on the market if you’re looking for a quick, easy, and effective way to insure your business.
Zurich
Zurich, one of the world’s top insurance companies, has used its enormous financial muscle to develop one of the most comprehensive cyber risk insurance products on the market.
Also, Zurich not only protects you against a wide range of cyber threats, but it also provides a number of different options to help prevent cyberattacks from occurring in the first place, ranging from cyber risk assessments to technology recommendations, and even helping you plan out your entire cyber security strategy.
Although they lack the personal touch of more UK-centric providers, Zurich is well worth considering if you’re looking for a total package solution to your cyber security risk.
FAQs about Cyber Risk Insurance for Small Businesses in the UK
Does my business need a cyber risk insurance?
Yes, it does if you use the internet to transact business. Cyber liability insurance is a type of insurance that offers businesses a variety of coverage options to help protect them from data breaches and other cyber security issues. It’s not a matter of if, but of when your organization will be breached.
What does Cyber Liability Insurance cover?
- Privacy Liability Coverage
- Network Security Coverage
- Media Liability Coverage
- Network Business Interruption Coverage
Can i get cyber risk insurance for Bodily injury and property damage.
No, cyber risk insurance does not provide cover for bodily injury.
