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From your local café to huge multinational companies, more businesses are moving their operations online and most businesses are using online systems to manage their business. But with all the good technology does for businesses, it’s not without its perils.

In just a three-month period in 2019 (July to September), nearly 150 incidents of cybercrime were reported to the Australian Cyber Security Centre (ACSC) every day.1

If your business relies heavily on the online world to run, the last thing you need is some malware or denial-of-service attack interrupting your operations and revenue stream.

This is where cyber liability insurance can help. We’ll take you through the ins and outs of cyber liability insurance and why it’s something you should consider for your business.

What is cybercrime?

Cybercrime can include offences:

  • Which involve the use of a computer or other device (e.g. fraud and scams); or
  • That are committed against computers or other devices (e.g. computer hacking and ransomware attacks).2

Let’s use an example of a cybercrime. A medical clinic receives an email that appears legitimate but contains a suspicious link. When accidentally clicked by an employee, the link installs malware on the clinic’s systems and compromises patient data.

A cyber liability insurance policy could assist the clinic to deal with compromised computer system and may even make a payment to the clinic for the interruption to its business.

What is cyber liability insurance?

Cyber liability insurance is designed to protect your business when things go wrong on the virtual end of operations. This can include data breaches that result in legal claims made against you, system downtime causing an interruption to your business’ finances and cybercrime.

Coverage is generally split into two categories, first-party and third-party. This means that a cyber liability insurance policy can cover cyber incidents which cause damage to your business (the first-party) as well as those that affect your customers (the third-party).

unidentified person typing on a laptop in a dark room

What’s covered by cyber liability insurance?

As with most types of insurance, the inclusions of cyber liability insurance can differ between providers and policies. However, you can generally obtain cover for:

  • Legal fees associated with third-party claims made against you. Cyber liability insurance can also cover compensation payouts should these claims be successful;
  • Business interruption costs if your operations and revenue are affected by data breaches or cyber-attacks
  • Theft or loss of client information;
  • Data recovery after a cyber incident, including the cost of investigating the breach
  • The cost of hiring crisis management and PR to help your business’s reputation recover after a cyber incident
  • Extortion and blackmail if a ransomware attack hits your business. Cyber liability insurance can cover the payment demanded by the extortionists
  • The cost of notifying authorities or customers after a data breach

What’s excluded from cyber liability insurance?

Of course, insurance can’t cover every scenario. Again, coverage will vary across providers but some standard exclusions in cyber liability insurance policies include:

  • Equipment replacement costs
  • If facts were known before the cyber incident happened (e.g. if you knew there was a vulnerability in your systems before an attacker took advantage of it)
  • Damage to physical property

Why is cyber liability insurance important?

Cyber liability insurance can be as important as any business insurance, as cybercrime becomes more prevalent in a world that continuously moves online.

In fact, in just three months (July to September 2019), the ACSC received more than 13,000 reports of cybercrime. This amounted to approximately one report every 10 minutes during that period.1 Cybercrime is costing Australians more than one billion dollars each year, with small businesses the victims in 43% of these cases.3

What’s more, in another sobering story for small Australian businesses, 22% of small businesses reported being affected so severely by ransomware attacks that they were forced to cease operations in 2017.4 In the same study, a staggering 87% of small businesses said they believed they were safe from cybercrime simply because they use antivirus software.4 While it’s true that antivirus software is vital to protecting your business from cybercrime, cyber liability insurance is also an essential component.

Frequently asked questions

How much does cyber liability insurance cost?

The cost of cyber liability insurance is different for each business because premiums are calculated using factors that are often unique to your company. Some things that might affect how much you pay for cyber liability insurance include:

  • The industry your business operates in
  • How many employees you have
  • The cyber risks your business may face (e.g. a company that runs medical systems storing patient data will likely face a more significant risk from breaches than a local bakery)
  • How much you wish to insure your business for
  • Any additional options you add to your policy

Your policy premiums will also be affected by which provider you choose.

If you’d like an idea of how much your business could potentially pay for cyber liability insurance, you can complete a free quote through our business insurance comparison service.

Is cyber liability insurance necessary?

While not required by law, cyber liability insurance should be considered by any business that wants to protect their operations and customers. Cyber threats are continually evolving and becoming more frequent and one attack could have the potential to bring your whole business to a standstill.

If you’re unsure whether your business needs cyber liability insurance, perhaps ask yourself a couple of questions:

  • Does my company have the capacity and resources to manage a data breach?
  • Can my business afford the repercussions (like data recovery and lawsuits) of a data breach or other cyber-attack?
  • How significant of a risk does my business face if it becomes the victim of a cybercrime?
Who needs cyber liability insurance?

In short, any business that operates to some degree in the cyber world should consider cyber liability insurance. From small local businesses whose only online presence is their website to large multi-million-dollar companies that store data from thousands of customers, they could all potentially benefit from cyber liability insurance.

However, there are few industries where cyber liability insurance should be viewed as important, including:

  • Medical and healthcare providers
  • Retailers
  • Law firms
  • Financial institutions
  • The education sector
How do I compare cyber liability insurance?

Comparing cyber liability insurance needn’t be difficult. In fact, you can do it in three easy steps!

  1. Analyse your business and its needs, including how much of a threat cybercrime poses to it, how much you’d like to be insured for and what inclusions and optional extras you may want.
  2. Head to our business insurance comparison service to get started. Just enter in a couple of details about your business (like how many employees you have and your annual revenue) and choose the product you want to compare.
  3. Compare your options! Our comparison service will do the work for you by showing you the policies we have to offer from some of Australia’s leading insurers. All you need to do is browse through them and find one you like! You can also start your application for your chosen policy through us.

Protect your business with cyber liability insurance

No company is immune to cybercrime so protect yourself, your employees and your customers as best you can with cyber liability insurance. Whether it’s a data breach, a ransomware intrusion or denial-of-service attack that interrupts your revenue, cyber liability insurance can help cover the costs keeping your business protected online.

Get cyber liability insurance for your business today through our business insurance comparison service. Just a few minutes comparing quotes could save your business down the line. So why not see what we have to offer?

Sources

1 Australian Cyber Security Centre – Cybercrime in Australia: July to September 2019. Published December 2019. Accessed April 2020.
2 Australian Federal Police – Cyber crime. Accessed April 2020.
3 © Commonwealth of Australia (Australian Small Business and Family Enterprise Ombudsman) 2017 and 2018 – Small Business Cyber Security Best Practice Guide. Accessed April 2020.
4 Australian Small Business and Family Enterprise Ombudsman – Cyber Security: The Small Business Best Practice Guide. Published 2017. Accessed April 2020.

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