When a data breach or cyberattack affects your tech company or your clients, cyber liability insurance can pay for legal expenses, credit monitoring services, and other recovery costs.
If hackers steal sensitive information or hold data or services hostage, your business pays the price. In fact, the average cost of a small business data breach is $86,500, according to the internet security firm Kaspersky Labs.
Some small tech companies assume hackers target only large companies. But nearly a third of all cyberattacks hit small and medium-sized businesses. These attacks are often successful, since smaller tech companies are less likely to have a strong defense against hackers.
You can purchase two types of cyber liability coverage: first-party and third-party.
Many cyber liability insurance policies include both types of coverage. Read more about first-party vs. third-party cyber coverage.
Software developers can be held liable for errors that lead to cyberattacks or data breaches. Errors may include faulty code, programs without proper security measures, and compromises that occur because of mistakes they make while working at a client’s office or on a client’s network.
Unfortunately, IT consultants can be held liable for security breaches even if they didn’t create the IT solution that was compromised. Merely recommending an IT product can make you liable.
If you advise a client to switch to a software as a service (SaaS) solution and the cloud-based data is compromised, a client could blame you.