3 Myths and Facts About Cyber Insurance for Small Businesses

In our current digital age, businesses of all sizes are increasingly reliant on data and information stored and carried through cyberspace. With new technology, information can make its way around the entire world in just a few seconds. However with this innovation comes a lot of risk. Cyber criminals target financial institutions, healthcare operations, government entities, non-profit organizations and businesses of all sizes in order to gain access to the wealth of personal information used to operate these entities.

Cyber risk is an ever-changing and evolving threat with data breaches occurring every single day, whether from human error, accidental disclosure or one of a wide variety of commonly used malicious cyber attacks. Based on information published by Breach Level Index, a average of more than 5,000,000 data records are lost or stolen each day.

Larger businesses are typically well-versed in the importance of mitigating cyber risks through the implementation of a combination of extensive IT security operations and cyber-risk insurance coverage. For smaller businesses, the risks are just as pervasive, yet many small business owners mistakenly believe that they don’t require the same level of protection as larger businesses. According to the U.S. House of Representatives Committee on Small Business, only 14 percent of small businesses reported having a plan in place for keeping their company cyber secure.

However, the consequences of a data breach for smaller businesses who lack cyber coverage can be potentially devastating, so it’s important to help clear up the myths about cyber insurance before it’s too late. Here are three common myths and facts about cyber insurance for small businesses.

Myth #1: “Our business is too small to be a target for cyber criminals.”

Actually, approximately forty percent of all cyberattacks are focused on companies with less than 500 employees. Some of the most common causes of major cyber loss claims for small businesses include; lack of encryption tools on mobile devices, employee malice or error, phishing emails and spyware or ransomware intrusion targeting customer information. The average cost of a data breach is $3.62 million, according to a 2017 study. For a small business, that can be a very damaging blow.

Myth #2: “Our level of cyber exposure is not that high.”

Many small business owners believe their believe their network operations are low-tech and not of value to cyber attackers. However, quite the opposite is true. Many cyber attackers see small businesses an an opportunity for easily accessible data. Any business that uses any type of technology to store or transfer data as part of their daily operations is at a risk of cyber attack.

Myth #3: “Our general liability coverage protects us from cyber risks.”

While there may be a very small amount of cyber coverage in a commercial general liability policy, there are also numerous exclusions. These policies are not designed to respond to cyber attacks. Additionally, underwriters are increasingly removing cyber coverage from general policies in favor of cyber-specific policies. The only way to ensure a small business has comprehensive cyber coverage is to add a specific cyber liability policy to their small business insurance package.

About American Team Managers Insurance Services

Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.