Why you need cyber liability insurance now more than ever
For the self-employed, a cyber liability claim could be crippling but do you really know the risks? We look at why cyber cover is essential in 2020.
Cyber liability insurance is one of those funny things that just wasn’t considered a decade or two ago, but now it’s as essential as any other business insurance, especially for the self-employed. Ultimately, cyber insurance will protect you financially should you experience a data breach, while really comprehensive cover should also give you expert, professional support should you find yourself the victim of a cyber-attack.
Cyber crime is on the rise
While you might believe that cybercrime is something that happens to other people and could never happen to you, you should bear in mind that cybercrime has actually been on the rise throughout 2020.
A recent report by cybersecurity company Nexor analysed police data to find £6.2m has been lost by UK businesses to cyber scams in the last year with a 31% increase reported at the height of the coronavirus pandemic during May and June 2020. Nexor reported that 3,445 UK businesses fell victim to a variety of cyber scams between September 2019 and September 2020. Of those, 1,740 were reported since the first lockdown began. This naturally falls in line with the rise in people working from home.
Sarah Knowles, Senior Security Consultant at Nexor explained, “The last six months have opened up many opportunities for malicious hackers to intercept individuals and businesses as we have been thrown out of our usual routines and away from reliable systems. Across the country, millions of people switched to work from home and for many businesses, this left the door ajar as cybersecurity took a back seat with such short notice.”
So, with home-working likely to continue as we find our way out of the pandemic, people need to be aware of the risks to themselves personally so that they can adequately protect against them.
What risks do ordinary people face from cyber crime?
While much of the cyber crime we hear of in the news involves big businesses, huge data breaches and millions of pounds in losses, there are still acute risks to individuals and small businesses that can be just as catastrophic for those involved. So, what are the risks faced?
One of the most noticeable effects of cyber crime is financial loss. There are obvious reasons for this, such as theft via a phishing scam, extortion using ransomware, or money siphoned from accounts thanks to stolen credentials. However, there are also less obvious, secondary losses, such as loss of earnings due to business interruption, or paying professionals to put things right. Whether you’re a private individual or a small business, all of these costs can have a big impact on your finances.
Losing data may not seem like a big deal and you may well be just thinking it’s simply a matter of changing your passwords. However, the effects of data loss can be devastating. Firstly, it can leave you open to identity theft, which can result in financial losses and even debts in your name. It could also leave you open to extortion, should cyber criminals believe you have something that you wouldn’t want others to see.
If you’re self-employed, the effects could be even more widespread, as it may not be your data that is lost. Losing client data could have massive ramifications beyond just you, but they could also leave you open to legal action.
Regulatory and defence costs
Should you find yourself having lost client’s data in a cyber-attack, you could find yourself exposed to regulatory or legal action if it is concluded that you did not comply with best practice in order to prevent cyber crime. Depending on the scale of the data breach, and the consequences, these costs could be huge – and you have to ask yourself what the implications would be for you and your family should you find yourself having to pay them.
How cyber insurance can help
This is, naturally, where cyber insurance steps in. While you should be doing everything in your power to protect yourself from data breaches in line with best practice advice from organisations such as the National Cyber Security Centre (and simply having some antivirus software isn’t really enough these days), having appropriate cyber liability insurance will help to protect you should things go wrong.
There are lots of cyber insurance products out there, and you need to do your own research into which is best for you, but anyone who is self-employed should be looking for products that include cover for:
- Business interruption costs – to help negate the effects of any downtime while you get on top of the issue
- System and data rectification costs – to help get things working again so you can be back up and running as quickly as possible
- Regulatory defence and penalties – to cover the cost of any legal ramifications that might come your way in the aftermath
- Cyber extortion and ransom costs – to cover you financially should you have to pay out to cybercriminals in order to regain access to your systems.
It’s also worth looking for cover that gives you access to support services such as ReSecure. This is a helpline which gives you access to cybersecurity specialists. In the event of a breach, they will help you determine the cause and assist in the recovery of lost data. They will also help you get your systems up and running again. This kind of support is invaluable to the average small business owner who may not necessarily have a vast knowledge of cybersecurity and cyber crime themselves.
So, while cyber insurance can’t stop you from falling victim to cybercrime – that is something you need to do yourself – it can help to keep you afloat should the worst happen.
This article was contributed by Kingsbridge Group