Do You Sell Products or Services Online? You Need To Know About Cyber Liability Insurance
Selling products online results in some attractive benefits for business owners. The potential reach is massive, and company managers will be able to sell products to a wealth of individuals. A specific targeted marketing approach is also possible. This can dramatically improve the monthly profit margin for a company. However, it’s important for business owners to know that a security breach is a possibility. Businesses that sell products online can be exposed through security threats such as hacks. This could have a negative impact on the business and be detrimental to the future of the company. As such, business owners must understand potential dangers. They need to be armed and ready with solutions for any problems that might arise.
What Is Liability?
Business liability will affect a company, no matter how big or small it may be. A company could be liable for the failures of a business model or a security threat they did not anticipate or prevent. Cyber liability follows the same set of rules and guidelines. It is important that businesses do not expose clients to potential issues with security. For instance, a business might be selling a product online. This would include the transfer of sensitive data such as credit card details. If the security was not up to standards, this data could be stolen and used against the customer. At that point, the business is left liable.
Cyber liability should be a consideration whenever any part of your business transactions involve an online element. A transaction does not need to have occurred for a company to be liable. It is possible that the business has simply published sensitive information. Or, data related to the client online. If the data was stolen, the business would be liable. Particularly, if that data was not protected and it led to financial loss for the client.
Liability To The Client
Failure to understand the issues with cyber liability could cost a business a fortune in legal fees. If the client can prove that the company put their details at risk, they may be able to make a financial claim against the business. However, it is important to realize that businesses are not just exposing themselves to a financial loss. When a business is found to be liable for a data theft or hack, the reputation of the company is also damaged. This can make it more difficult to maintain future sales or other transactions. Customers could become wary about buying from a business that has failed to provide appropriate security measures in the past.
Beyond Digital Security
Today, the most common form of a failure with cyber security would be a digital breach. This could be an issue with a piece of security software that has allowed a breach to take place. Business owners must be aware that they will also be responsible for any hardware failures- if a computer or laptop was stolen from the office, for instance. Business owners will also be exposed to cyber liability if there was a theft related to the actions of an employee or stakeholder. As such, there are multiple ways in which a business could be held liable for a breach of cyber security.
Protecting The Business
The best way to protect a business from the costs of cyber liability is with insurance. The online world is growing, and this specialized form of insurance is still a somewhat newer concept. However, it is available to purchase right now and will protect a company from the risk of an attack. There have already been cases of cyber breaches that have hit the headlines. The most recent noteworthy attack was on Apple. Thousands of private files were stolen from their clients. Ultimately, this could end up costing the company millions. With insurance for cyber liability, a business will be protected. It will receive compensation for any money lost due to a cyber threat.
Who Needs Protection?
It is important to understand that is not just online businesses that need this form of protection. Any business that operates online could be exposed to this type of threat. Companies that use any form of electronic devices may be exposed. As such, there are very few businesses that should be without some form of cyber liability insurance. Ultimately, it could save a company from going under due to an expensive and time-consuming legal battle.
Issues To Consider Purchasing Cyber Liability Insurance
If a business does purchase cyber liability insurance, they must assess the different issues involved. First, it may be possible to reduce the cost of the premium by providing the best security measures. Company owners should be looking into using secure online transaction methods. They should also be examining how to get the best online security for their data files. Business owners may find that using external hard drives for the storage and transfer of data increases the premium. These are seen to be less secure compared with online storage systems.
A company should consider how exposed they are to a cyber threat. They should keep records of how many data files they store. With this information available, an insurance company will be able to provide an accurate assessment of the coverage. They will be able to offer the best deal for financial protection on the market.
Finally, a company must look at what factors negate their eligibility to make a claim. On some insurance policies, a claim may not be possible if the breach was found years after it happened. This is one of the reasons why it is important to keep an accurate check on security systems. Owners should constantly be examining their systems and looking for signs of a breach. Recognizing an issue early on, could reduce the risk of a large insurance claim due to a security issue.
In 2016, cyber activity has become an essential part of almost every business model. This has made the question of cyber liability a crucial consideration for all company owners. However, it is vital that options of protection are considered carefully. Business owners must understand where their coverage starts and ends.