Cybersecurity and Data Protection insurance – cost and types of policies

Whenever you budget the expenses of your business, Cybersecurity and Data Protection insurance must be high on the list because you can’t always know exactly what is going to happen in the future.

With the protection provided by insurance against accidents and all the other types of insurance we will tell you about, you can protect your business and yourself in case something unwanted happens.

Like any business owner, for your Cybersecurity and Data Protection enterprise, you must consider how much financial risk you are taking on.

If your Cybersecurity and Data Protection business runs without proper insurance, you are taking a giant chance not just of losing some money but of a total wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the consequences of their actions. 

In this article, we are giving very general guidelines for growing businesses to highlight what the main kinds of insurance that you need are, and where we can, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your Cybersecurity and Data Protection business?

What this means, for any Cybersecurity and Data Protection business owner, is that if some person claims that your actions caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your Cybersecurity and Data Protection business is not sheltered by laws in the same way as states are, where edicts can place a “cap” on the maximum level of liability.

In some states, like New Jersey, there are specific monetary levels that limit the amount a judge can award in any case against the state.

In a court case, it’s purely the duty of the jury to award whatever amount they deem appropriate, even sometimes giving a person more than they have claimed.

When you are running your Cybersecurity and Data Protection operations, you can’t escape responsibility for the outcomes of your actions.

Even more importantly, unless you have spent up-front the money necessary to have your business running as an LLC, all of that liability belongs to you alone.

What does Cybersecurity and Data Protection insurance protect you from?

For your Cybersecurity and Data Protection business, the most important types of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

Also there are some mandatory kinds of insurance that various states require.

In the next few paragraphs, we will explain the most important points any Cybersecurity and Data Protection business owner should know when negotiating the insurance needed.

The main types of insurance for your Cybersecurity and Data Protection businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any Cybersecurity and Data Protection business is dealing directly with members of the public, and that means you generally have the danger that some accident can happen to them personally or else something of theirs can be spoiled.

In such a case, they can sue you for compensation.

General liability insurance policy for your Cybersecurity and Data Protection business protects you against claims coming from injury to customers or damage to their property.

It protects your Cybersecurity and Data Protection business from the claims themselves and as well to any resulting court costs and legal fees of the lawsuits.

In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts require proper liability insurance.

The usual level of general liability insurance for your Cybersecurity and Data Protection business would be with a upper limit of $1 million for a single submission and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your Cybersecurity and Data Protection insurance operations.

Professional liability insurance for your Cybersecurity and Data Protection business

In the event where a customer alleges some negligence, errors, or omissions in how you conducted your Cybersecurity and Data Protection business for them, you can quickly face a law suit.

Even if the case against you is judged in your favor, the cost of defense can be substantial, and the impact on your reputation can be damaging.

Every small Cybersecurity and Data Protection business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.

See the table in the cost of Cybersecurity and Data Protection insurance section below for average prices of professional liability insurance for your Cybersecurity and Data Protection operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that what they received didn’t meet your description of function, or that your guidance was basically incorrect.

You need to be aware of the specific laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held responsible for damages caused by products claimed to be defective.

To cover yourself against any possible lawsuit, you need Product liability insurance for Cybersecurity and Data Protection

Only you can know exactly how much insurance you need.

Best advice is to consult with experienced insurance agents, brokers or company representatives for guidance.

Commercial insurance

Commercial vehicle insurance for your Cybersecurity and Data Protection business

Beware! – almost all policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the vehicle is being used for business purposes.

The best way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a proper commercial vehicle insurance package.

Commercial van policies insure the value of any vehicle in case of accident, malicious damage, fire, or theft.

Also, in case of any accident, the truck itself, the content and any legal bills, medical expenses, and property damage is covered if your van is involved in an accident.

Most states, other than Virginia and New Hampshire, mandate this type of insurance.

The necessary value of the insurance is calculated on the depreciated value of the vehicle, and your requested level of cover of contents. 

Tools and Equipment insurance

Since your Cybersecurity and Data Protection business needs specialized and dedicated equipment, you will realize how much it can cost to replace it in case of any damage, loss, or theft.

The equipment may be subject to malicious damage, deliberate fire, theft, other such unexpected acts.

In addition, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can destroy your whole business in one stroke.

Unless you can afford to immediately replace such specialized gear quickly out of your own pocket, you must have full-level equipment insurance so that you can immediately buy everything needed to keep your Cybersecurity and Data Protection business running.

It is impossible to advise how much equipment insurance you need – it’s really dependent on how much you have invested in your Cybersecurity and Data Protection business’ equipment.

Commercial Property insurance

Any Cybersecurity and Data Protection business that owns or rents space in a building must have a commercial property insurance policy.

If you own the space, you certainly have a substantial capital investment, as well as a big liability if there’s a mortgage.

Your physical building location must carry insurance coverage for the value of the premises and contents against unexpected occurrences like fire and storms, and against criminal damages like theft and vandalism.

If your Cybersecurity and Data Protection business works in areas of high risk, like California or North Carolina, additional coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Illinois, where intense cold snaps can cause damage to outer coverings of Cybersecurity and Data Protection business premises, there is a need for more extra cover than in warmer climes.

Whereas the level of cover depends entirely on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of Cybersecurity and Data Protection insurance section below to give some indication of the average prices per million dollars of property insurance for your Cybersecurity and Data Protection business.

Temporary insurance by month, week or day for your Cybersecurity and Data Protection business

Is your Cybersecurity and Data Protection business working part-time or casually, or is the level of business variable?

Using short-term insurance makes perfect sense. Business insurance by the month, day, or week – temporary insurance for Cybersecurity and Data Protection – are special policies where you can cover a designated period when you want to be covered.

By only paying for that period of cover, you will save by having less premiums but still having adequate risk cover.

The essential feature of short-term insurance is that you purchase the cover for a defined period – a nominated date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of better business activity, get the existing cover raised.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your Cybersecurity and Data Protection business

You have the choice to combine a few of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP integrates commercial property and public liability insurance by packaging these coverages into one insurance policy, which can save you money.

BOP insurance will shield you if any claims of injury or property damage are made.

It is mostly the right choice for small and medium-sized Cybersecurity and Data Protection businesses, such as yours.

There are some limits that will rule whether BOP is suitable for your own business.

BOPs do not cover your professional liability or commercial vehicle policies.

Also, the size of your business will determine whether you are allowed to take out BOP cover.

The usual business that can take out a BOP policy must have less than one hundred employees, and not more than five million dollars in annual revenue.

As well, you must separately take out the necessary worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your Cybersecurity and Data Protection business employees

In almost all states, it is mandatory to have workers compensation insurance when your Cybersecurity and Data Protection business has one or more employees.

Workers compensation insurance covers the enterprise against any costs that arise if any hired hand experiences an injury or becomes sick as a result of work.

The benefits provide for medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s laws in this regard can leave you as the employer having to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only allow coverage from the government-run monopoly state funds.

In these states, you can’t obtain your workers compensation obligations from private insurance providers.

Workers compensation premiums are worked out based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must refer to the relevant authorities in your state.

Average costs of these types of insurance

Although every Cybersecurity and Data Protection insurance need is unique, there are enough examples of standard quotes from insurance companies for us to give appropriate guidelines, including what are the cheapest rates offered.

Of course, you should always check with an insurance representative what’s relevant for your business.

The list below is of annual premiums we have researched for the main types of insurance your Cybersecurity and Data Protection businesses needs.

Cost of insurance for your Cybersecurity and Data Protection operations depends on many different factors.

We have estimated these figures for small independent Cybersecurity and Data Protection businesses.

In larger states like Texas, premiums are generally about 20%-30% higher than national averages, while in smaller states like New Mexico, they usually are about 20%-30% less.

The location and size and type of your Cybersecurity and Data Protection business can have a big effect on the cost of different policies.

You should consult with professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by searching for insurance companies near where your business is located.

Another useful source of information is the local Better Business Bureau in your city.

FAQ

What is small business insurance for Cybersecurity and Data Protection operations?

This is a wide term used to describe standard insurance policies designed to protect Cybersecurity and Data Protection business owners from risks like bodily injury, property damage, claims of negligence.

Does my Cybersecurity and Data Protection business have to have insurance?

Some of the forms of insurance are not mandatory for you to operate your business, but they can protect you from risks in your business operations.

Several other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small Cybersecurity and Data Protection business insurance policy cover?

Liability insurance provides protection against lawsuits or claims filed by a client for bodily injury, property damage, or negligence.

The precise cover will vary based on your own operations.

See the table in the costing section above for average prices of the recommended policies for Cybersecurity and Data Protection insurance.

How much will Cybersecurity and Data Protection business insurance cost?

As well as the size of the business, several other factors, such as location and claims history, are used to determine your policy’s cost.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

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