Manage a tech company? Learn why you must have cyber liability insurance
The world has been seeing massive growth in electronic communication or digital communication. From the moment we wake up till we sleep, we engage in hundreds of digital transactions knowingly or unknowingly.
When you run a business that is vested in digital services or products, it will involve your clients or customers sharing very sensitive information, which also includes various business and financial credentials. Besides client information, a technology company will also have other sensitive data such as business contracts, e-mails, pricing, employee details, etc. that can be vulnerable and thus open to exploitation.
The data on cybersecurity paints a clear picture of the type of cyber risks a business has to endure. AV-TEST registers over 350,000 new malware every single day, i.e over 127 million new malware every year! And the numbers keep on rising because data exploitation is a lucrative crime as various laws and regulations rush to catch up with this ever-evolving sector. The news of Yahoo being hacked in 2016 compromising over 3 billion accounts is an example of how damaging data breaches can be not only to short term business but long term reputation and business.
In January 2019 alone, 1,769,185,063 user accounts were breached across various hacks. So it goes without saying that like every business, a business working with digital products or services will also experience its fair share of risks. Companies that can manage cyber risk well will gain client and investor confidence and thus experience business growth. And this brings us to Cyber liability insurance.
Cyber liability insurance provides the policyholder coverage against financial losses that they may suffer from data breaches or other cyber-related events.
For example, when a business experiences a data breach like a hack where sensitive financial credentials are stolen, then the policy will offer financial support for different legal and non-legal expenses that is related to the breach.
Most Cyber liability insurance will provide financial support for the expenses incurred by the company in restoring the stolen/damaged data, securing the data on the servers and computers, etc. in addition to the legal expense support. The standard coverage found on most Cyber liability insurance covers are as follows:
- Lost incomes due to a data breach
- Extortion losses
- The amount incurred in notifying the customers
- The cost incurred in fighting class-action lawsuits
The level of coverage and additional features depends on the type of Cyber liability insurance that one chooses.
Another factor to consider when it comes to Cyber Liability Insurance is whether to choose first-party insurance or third party insurance.
First-party coverage: In this type of coverage, the insurance company will only provide coverage to the losses incurred to your company.
Third-party coverage: The insurance company will cover the legal expenses against complaints raised by the customers or from people who were affected by what happened with your business.
Starting a technology business is certainly demanding. Knowing the risks involved and having a plan B is a crucial part of the conducting business. Being a tech company, the risks are mostly related to the data integrity of both the business and its customers. Having cyber-liability insurance gives you that boost of confidence you need to take your business to new heights.
If you are wondering which other insurance policies you can use to protect yourself and your business from financial risks, then we can help! Contact NAIB today to know about various insurance policies from the best insurance providers in Dubai.