What is cyber insurance and do I need it?

Blogs 26 Aug 2020

With new cyber-attacks and data breaches impacting small businesses and the self-employed every day, find out why it pays to be protected with cyber insurance.


No matter how small, all businesses face cyber security risks because of how we use technology today.

Cyber insurance plays an important role in your risk management strategies, helping to cover some or all of the costs in the event of a cyber-attack.

According to a recent government survey, only 32 per cent of businesses reported being insured against cyber risks. With the average cost of cyber security incidents for small businesses reaching over £3,000, it pays to be protected.

As more and more businesses are making the most of ecommerce and digital tools, learn about the benefits of cyber insurance. 

What is cyber insurance?

If your business is subject to a cyber incident, like a data breach, then cyber insurance can help you to cover the costs and manage the situation using trusted and experienced incident responders.

It can support your business with minimising disruption by offering financial protection and helping with any legal repercussions, such as fines.

Do I need cyber insurance?

If you’re subject to a breach, having insurance can be a valuable lifeline, as potential fines, legal fees and claims soon add up.

However, it’s important to make sure you’re following all the best practices to protect your business, as having insurance won’t prevent a breach or attack. These proactive measures are generally expected to be in place before making a claim.

Think of it like your house insurance: you wouldn’t leave your doors and windows wide open when going to work just because you’ve got house insurance!

Cyber security policies, business password policies and adequate staff training are all examples of best practices to help protect your data and your business.

The National Cyber Security Centre has published guidance to help small businesses with cyber insurance, highlighting key areas that you should be aware of.

What are the impacts of a cyber-attack?

From losing customer data to systems being made unavailable, there are a range of impacts a cyber-attack can have on your business. You should be aware of the potential financial damage a cyber incident can have, as well as the time it takes to recover.

Possible damage to your business could include:

  • Losing money or data
  • Cost of implementing new measures
  • Staff time taken up responding or being unable to work
  • Wider business disruption

The more secure and robust your cyber security policies are, the smaller this impact will be. Cyber insurance can help you to navigate these impacts if the worst should happen.

What does a cyber insurance policy cover?

If you’ve experienced issues with cyber security, you’ll know how stressful, costly and time-consuming managing the situation can be. Cyber insurance gives you a safety net and covers your liability, to an extent, for any incidents. It includes both first-party and third-party claims.

FSB Cyber Protection offers limited cyber security insurance to FSB members in the event of a cyber incident, giving you peace of mind.

  • Up to £5,000 first-party claims
    • This covers your own loses following a cyber-attack or data breach. This might include costs such as repairs to software and hardware, or the financial impact of your business being interrupted.
  • Up to £10,000 cover for third-party claims
    • This covers your legal liability for damages and costs following any claims brought against you.  For example, this might include fines from regulatory bodies, legal action brought against you, or e-media issues such as libel, slander or defamation.

You can also choose to increase your cyber insurance and protect your business with enhanced cover. As your small business grows, the risks and financial risk exposure become greater.

Protecting your business against cyber-attacks is vital, which is why FSB Cyber Protection is included in FSB membership at no extra cost. If you need help, our team of cyber experts are only a phone call away.


 

FSB Cyber Protection

Providing access to both an advice line and a limited insurance designed to support and protect your business at no extra cost.

Find out more