Many nonprofit organizations are tasked with operating on a micro-thin budget. Cybersecurity protection is often overlooked which can lead to serious security breaches and data theft.
To protect against these threats, nonprofits are urged to acquire cyber liability insurance. Cyber liability insurance covers financial losses due to data breaches, cyber-attacks and similar cyber events.
What Does Cyber Liability Insurance Entail?
Cyber liability insurance is a type of insurance policy that provides organizations with a combination of coverage options to protect against cyber security issues, such as breaches and data theft.
Many policies cover a broad range of cyber events, such as financial fraud, network outages and ransomware. However, not all policies are equal and many include limitations and exclusions, such as voluntary shutdowns.
Cyber liability insurance generally covers several main insuring agreements, including network business interruption, network security, media liability and errors and omissions.
If a nonprofit organization should experience a cyber security event, their policy may cover costs associated with the attack, such as lost income or the cost of repairing damaged computer systems.
A cyber liability insurance policy can be a vital safeguard for protecting against potentially devastating financial consequences of a cyber security event.
An insurance company may offer various coverage options to address the unique risks faced by the nonprofit, such as litigation services, forensic investigations, business interruption, crisis management expenses, betterment, regulatory defense expenses and cyber extortion.
Cyber liability insurance is generally broken down into two parts:
First-party coverage helps cover damages that a business suffers due to a data breach, such as business interruption, investigative services and data recovery.
Third-party coverage helps cover damages that affect partners or customers due to a cyber-attack on the business. This may include media liabilities, legal fees, settlement expenses and similar costs.
What Is Not Covered by Cyber Liability Insurance?
Cyber liability insurance policies can range significantly in terms of coverage and exclusions. Carefully read through the policy to determine what limitations the nonprofit may face when presented with cyber security events.
Some of the most common exclusions are:
Property loss, such as losing a laptop or smartphone, is not generally covered by cyber liability insurance. This type of loss is covered by a commercial property insurance policy.
Social engineering is a common way that cybercriminals target victims by manipulating them into transferring business funds. Many cyber liability insurance policies do not cover social engineering schemes but may be available as an add-on coverage option.
Bodily Injury/Property Damage
Most cyber liability insurance policies do not cover claims of bodily injury or property damage. A general liability policy is required for these types of claims.
Cyber liability insurance does not insure a nonprofit against acts of robbery, fraud, employee theft and similar crimes. This type of coverage is generally found under a commercial crime insurance policy.
How Much Does Cyber Liability Insurance Cost?
The cost of cyber liability insurance can range from as little as a few hundred dollars up to $50,000 or more per year for larger organizations.
When comparing policies, it is important to consider the budget of the nonprofit and what coverage amounts are needed. Some of the biggest factors to consider when selecting cyber liability insurance include:
The industry in which the nonprofit organization operates will play a major role in the cost of an insurance policy. Organizations involved in riskier industries, such as those that operate mostly online, will likely face more cyber threats compared to a brick-and-mortar business that has a low-traffic website.
Organizations that require higher and more complex coverage will ultimately pay more for insurance. For example, an organization that stores a large amount of customer data is at a greater risk of data loss and may need more coverage.
When providing an insurance quote, an insurance company will look at what security measures the organization has in place to protect against cyber events. This may include software such as antivirus protection or company-wide policies that require employees to frequently update their passwords.
Nonprofit organizations that limit access to certain sensitive data can often save money on cyber liability insurance. For example, a business may choose to only allow senior employees access to private data, thus lowering the risk of data loss.
If a nonprofit has a history of claims relating to cyber events, they may face higher rates compared to businesses that have few or no prior claims.
Importance of Acquiring Cyber Liability Insurance
Cyber liability insurance can be an invaluable tool for nonprofit organizations that operate their businesses with the use computers and other technology, store sensitive customer information or face other threats that could put them at risk for data breaches or other cybersecurity events.
Businesses can be impacted in a wide range of ways following a cyberattack. When an organization experiences a cybercrime, its reputation often suffers as a result.
Clients and customers want to know that they can trust a business with their personal information and if this trust is broken, they may move onto a competitor.
If financial information is compromised during a cyberattack, an organization could be hit with hefty fines from debit and credit card companies. This is especially true for businesses that are found to not be fully compliant with requirements established by the PCI Security Standards Council.
Speak with a Business Benefits Consultant Today
Although there is no way to guarantee that a nonprofit organization will never experience a security breach or data theft, there are ways that businesses can help safeguard their company and its stakeholders.
Cyber liability insurance is an affordable and essential solution for any nonprofit that uses technology to operate its business. Business Benefits Group offers nonprofit organizations comprehensive advice and support for selecting the right cyber liability insurance policy.
To learn how you can better protect your nonprofit organization against cybersecurity crimes or to speak with an experienced business benefits consultant, reach out to the insurance experts at Business Benefits Group today.