5 Reasons Your Business May Need Cyber Liability Insurance

The internet of things is now an intrinsic part of everyday life, and the same is applied to business owners.

Connecting to the internet for your business operations is something many don’t think about. From online transactions that can leave your financial details vulnerable, to the valuable client and employee information.

One leaves a digital trail of breadcrumbs with every move online, and cyber security is essential for many small and prosperous businesses alike.

How business is affected by poor cyber security

South African business owners are at risk – according to the Daily Maverick, Interpol’s African Cyberthreat Assessment Report found that South Africa was the most affected on the continent by cyber-attacks.

Though it may feel like an unnecessary cost, cyber-attacks are becoming more sophisticated, and your small business may become a target at some point.

For some companies in the United States according to Throttlenet, the expense of cyber-attacks is in the millions of dollars range. And an increase in illegal online activity in South Africa has made many people and businesses victims of online theft.

Whether a ransomware attack or data breach, almost every company is going to experience a cyber security breach in the future.

We’ve listed the 5 most important reasons why your small business will need to consider Cyber Liability insurance, that will ensure your business is safeguarded from online threats.

1. Most businesses depend on the internet

The internet plays a major role for small businesses, whether you sell products online or not.

Online payments and transactions are household names now, and with cyber-attacks on the rise, small business owners are looking to protect themselves online – and Cyber Liability insurance is the shield many rely on.

Everyday activities can lead to a cyber breach or attack, such as:

  • Communicating via email with customers, employees, and suppliers
  • Managing your website
  • Managing your social media platforms
  • Storing financial details and important business information on a device

If any device with access to this type of information is connected to the internet, it is vulnerable. For this reason, you should consider adding Cyber Liability insurance to your policy.

2. Your business stores or uses personal and sensitive data from customers

Cyber Liability insurance is often essential when your business uses, shares, or stores clients’ and customers’ personal information. Data runs the world now, and it is a golden loot pile to hackers that steal and manipulate information and data, which makes you a target for attacks.

Without safeguards, no business is truly safe. The Western Cape Blood Service has recently experienced a significant cyberattack on its information systems. Such attacks are detrimental to a large organisation, and small businesses face the same risk.

Hackers are looking for anything that can confirm a personal identity, and is at risk of a cyber-attack, such as:

  • Telephone numbers
  • Email addresses
  • Postal address
  • Full names

Companies are obligated to store, use, and collect data in a responsible manner. According to The Privacy Act (Protection of Personal Information Act (POPI), it is the responsibility of the business to ensure the data is stored securely and held safely – though it is advised to stay informed with the latest revisions.

Small businesses should take steps to minimise the risk they face online and implement a risk management procedure that employees must follow. Such procedures could be a protocol to follow if a data breach occurs, and how to claim from your Cyber Liability insurance policy.

3. The Cloud is never fully secure

The cloud is an integral part of business in the online era, and despite standard security tools and firewalls, the cloud can be a vulnerable point for your business.

The risks your business could face from cyber-attacks of the cloud could include:

  • Data breaches
  • Cyberattacks
  • Unauthorised access
  • Malware infections

If your confidential business details or client information is breached, this could cause your business major strain. Never mind the blow to your image and reputation. Cyber Liability insurance would then protect your business from such threats and give you the means to manage such an event.

There is a naive level of trust in cloud computing that has permeated our daily lives. [The] illusion that the cloud is a magical place where your data is easily recoverable and available on all your devices, regardless of what apps you use. Co-Founder, Rewind – James Ciesielski

4. Cyber attacks could cripple or disable your business operations

It’s difficult to say for anyone business, what the cost of a cyber-attack would be, yet it could be anywhere in the thousands at a minimum estimate. This would be a blow to any small business, and a fatal one to an uninsured business.

The financial strain could extend into financial interruption, and lead to slower growth due to a weakened reputation.

Without Cyber Liability insurance, all the costs from such a cyber-attack would be taken directly from the business, or more likely from your personal finances. South Africa has proven to be a hotspot for online attacks, and businesses will never know when a breach will occur.

5. Your current policy may not include Cyber security as part of your cover

Many insurance policies will only provide a very general cover from cyber-attacks, or none at all.

If you already have Public Liability insurance or Business Interruption included in your policies, they may not provide the necessary cover for your business needs. This is where a policy revision will be best used, to determine if you need to include Cyber Liability insurance in your policy.

How much cover will I need for my business?

Your business occupation will determine exactly how much cover you’ll need. If your business operations include any use, storage, or collection of client information, for example – you will need to consider having a policy that will protect you from the damage of a cyber-attack.

What is usually covered under Cyber Liability insurance and what is not

Here, we list out what is usually covered and what is not, under Cyber Liability insurance. Giving any business owner the necessary tools to start the journey of correctly insuring their business.

What is usually covered under Cyber Liability:

  • Cyber liability
  • Crisis management and notification expenses
  • First party expenses
  • Loss of business income
  • Cyber extortion
  • Digital media liability

What is usually not covered under Cyber Liability:

  • Negligent business activities
  • Unlawful business activities

Protect your business – Evolve with the hackers

As with any business, we adapt to the changing times. The digital era is an ever-growing entity, and businesses are merging into the world of the internet.

These emerging threats are just one of the challenges business owners face, and the protections from them have been made well.

Don’t let outdated insurance cover be the reason your growing business suffers. Find and compare the best quotes today, tailored to your specific business needs. With just a few clicks you can get multiple competitive quotes from some of South Africa’s leading insurers, and get covered instantly – Business Insurance Made Easy.

This is general information only and does not take into account your financial situation, needs, or specific objectives. As with any insurance, cover will be subject to the terms, conditions, and exclusions contained in the policy wording.