The prevailing thought among data security experts is that no matter the size or scale of your business, a data breach is inevitable. In fact, there’s a good chance your data has already been compromised and you don’t even know it.

A scary thought for sure, but it doesn’t make it any less true. And as the world becomes more connected and data thieves become more adept, the need for data security will only increase. While it’s easy to feel as though you have little to no control over this situation, there is a relatively painless step you can take to increase your digital protection: purchasing cyber liability insurance.

What is Cyber Liability Insurance?

Cyber liability insurance covers the first- and third-party risks associated with doing business online. It covers privacy issues, internet-related instances of intellectual property infringement, viruses or any other issue that may be passed along via internet connections.

Who Needs Cyber Insurance?

In truth, anyone that hosts a website that interacts with the public at large is a candidate for cyber liability insurance. This includes commercial businesses and website publishers. If you conduct even a portion of your business online or ask customers to trust you or a third-party vendor with their information, you should seriously consider purchasing cyber insurance.

What Does it Cover?

Cyber liability insurance actually covers quite a bit. Similar to other types of business liability insurance, it can cover lost sales due to business interruption and the cost to notify customers of a breach. This is especially important for small businesses. If you only have one line of business, and that business is shut down due to a data breach, then that breach can potentially shut your doors. With cyber liability insurance, you’ll have cash at hand to keep your business running until you can resume normal operations.

I Already Have Business Liability Insurance, So I’m Covered, Right?

No. Standard business liability insurance policies don’t cover cyber liability, and that probably won’t change any time soon. Policies and procedures surrounding digital communications change so rapidly that many standard liability insurance companies don’t feel comfortable rolling cyber liability under the same umbrella.

It is possible that the same company you have your business liability insurance with also offers cyber liability coverage, so it’s definitely worth asking about. Multiple policies with one agency often come with a discount, which can save your business money.

What Happens if I’m Not Covered?

In general, without cyber liability coverage, you and your organization are solely responsible for any data breaches and information leaks, including loss of business, communication with customers, an investigation, lost information retrieval or crisis management. Additionally, if any of your customers decide to sue you for jeopardizing their data, you would be responsible for all of the court fees and settlements.

All of Our Customer Data is Handled by a Third Party, So it’s Not My Problem

Unfortunately, it is. If you are asking for information and then storing that information with a third party or in the cloud, you are still legally responsible for keeping it safe. While it’s in the third party’s best interest to protect that data, no data management system has proven impenetrable to security breaches, so no system is infallible. Having cyber liability insurance will at least protect you if your third party host suffers a breach.

My IT Team Handles All of This, Right?

Unless your website is only visited by a handful of people every day, expecting your IT department to be on top of any and all data vulnerabilities and the latest in security protocols is unrealistic. While Fortune 500 companies might have IT departments specifically dedicated to risk assessment, most small businesses can’t afford that. Cyber liability insurance providers can and often do provide a risk assessment function, whereby they review your policies and procedures and work with you to reduce your risk.

In today’s interconnected world, it’s almost impossible to conduct business without using the internet. As a result, the risk associated with data storage and intellectual property has increased and continues to do so. You don’t want to find yourself in a situation where you need cyber liability insurance and don’t have it. Take a close look at your company’s online footprint to determine if cyber liability insurance is right for you.