Almost all businesses now use technology to manage the personal identifiable information (PII) of their customers, such as names, addresses, and financial details. Even with a strong cybersecurity strategy in place, your business could become victim to ransomware attacks, phishing scams, and similar damaging cyber threats.
Cybersecurity and business insurance policies are designed to protect businesses against the cyber threats that could lead to reputational damage, financial losses, and operational disruptions. In Hawaiʻi, businesses must meet specific requirements for notifying their affected customers of a breach which can be quite costly. Having the right insurance can help offset these costs.
Here’s what you need to know about the financial aspect of cyberthreats.
Cyber Attacks on Businesses are on the Rise
With the rapid growth of technology, cyber risks continue to impact businesses in nearly all sectors. In 2023, approximately 462,000 Hawaiʻi residents who enrolled in healthcare plans through the Hawaiʻi Medical Service Association (HMSA) were affected by a data breach at Navvis & Company.
The threat exposed information such as names, dates of birth, patient account numbers, and health record information. The Hawaiʻi Community College network also suffered a major cybersecurity incident in 2023. A ransomware attack that was first reported on June 13 affected more than 28,000 individuals.
Of course, these attacks don’t just impact individual businesses and their customers. With China’s cyber army attacking U.S. water and power supplies, including Hawaiʻi’s infrastructure, people and businesses across the island state could feel the effects.
Small businesses are commonly targeted by cybercriminals as they often lack cybersecurity expertise and have fewer resources, making them more vulnerable to digital threats.
Protect Your Business Against Cyber Attacks
Cybercrime refers to any criminal activity that is committed through a computer or other internet-enabled device. The main goals of cybercrime are to steal sensitive data that could be used to make money or force a business to permanently close its doors. Some of the most common cybercrimes include:
- Spoofing
- Identity theft
- Ransomware
- Phishing
- Business email compromise (BEC)
- Data theft
- Hacking
Business insurance steps in to help with the financial aftereffects of a cybercrime. Cyber liability insurance, in particular, provides businesses with financial protection against losses resulting from cyber incidents, such as data breaches, cyber extortion, and denial of service attacks.
What Is Cyber Liability Insurance?
Nearly every type of organization, from mom-and-pop shops to international companies, uses technology to do business. With technology becoming more complex by the day, businesses need to protect against the financially devastating repercussions of a digital attack.
Cyber liability insurance provides businesses with a range of policy options to help them financially recover after a covered event.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance works by helping to cover the costs associated with cyberattacks or data breaches on your business. Expenses, such as lost income or disrupted operations, are common in the aftermath of a cyberattack.
Your business may also be legally responsible for notifying customers of an affected breach according to state law. Insurance may also cover the cost of repairing damage to computer systems, and recovering compromised data.
When choosing a cyber liability policy, consider the following coverage options:
- Litigation expenses
- Forensic investigations
- Crisis management expenses
- Regulatory defense costs
- Betterment
- Business interruption
- Cyber extortion
Additionally, consider if your business needs first-party coverage, third-party coverage, or both.
- First-party insurance provides compensation directly to the insured business and may cover expenses such as customer notification costs, crisis management, and legal counsel for regulatory obligations.
- Third-party coverage provides compensation to another party when the insured business is liable for damages, such as if a customer brings a claim against your business due to negligence.
What Doesn’t Cyber Liability Insurance Cover?
While cyber liability insurance can help protect your business from major financial losses, it does have limitations. Cyber insurance does not usually cover property damage, including coverage for technological assets.
For example, if a hard drive was damaged during a cyberattack, you would likely need to file a claim under your business’s property insurance rather than your cyber liability insurance. In addition, intellectual property (IP) claims are generally not covered under cyber liability insurance.
How Much Cyber Liability Insurance Do I Need?
To protect your business against digital threats, the amount of coverage you will need depends on several elements. These include:
- The size of the company
- Annual revenue
- Industry and any industry requirements
- Likelihood of becoming a target
- Estimated potential damage following a cyberattack
Businesses in high-risk industries, such as medical, technology, and finance, may require more coverage than business sectors with less risk. In some instances, certain contracts may require businesses to carry cyber liability insurance.
Trust the Business Insurance Experts at Atlas for Cybersecurity Insurance
There are several steps that businesses can take to help protect against the fallout from digital threats, such as conducting regular security assessments, implementing strong cybersecurity policies and procedures, and developing a sound disaster recovery plan. Businesses in Hawaiʻi can also benefit by forming a working relationship with a trusted insurance agency.
Based in Hawaiʻi, Atlas Insurance Agency is the largest and most established insurance agency in the state. We take the time to really get to know our clients and assess their needs to determine the best coverage options.
When it comes to digital threats,we have you covered. Contact us today at (808) 400-6634 to discuss your cybersecurity and business insurance coverage options.