Startup cyber insurance is not a common consideration as an entrepreneur sets out in to the marketplace. After all, data breaches are always thought of as someone else’s problem. But many business people soon realize that the concerns and possible fears are realistic. The need for cyber insurance is unfortunately getting credible publicity.
The notion that a startup may have cyber liability, as it endeavors to do business, is awakening. In order o keep things simple, it is important to address data gathering and how the business undergoes its data retrieval and storage. Monitoring internal process are key. When considering cyber liability coverage, the business should focus on what redundancies they have in place to ensure data, the transmission of data, and it shortage. The simple idea of shifting the burden to a cloud service provider – a topic for another day – does not quite cut it when trying to minimize cyber liability.
Startup cyber insurance coverage has limits that should be considered. Within that there is disclosure requirement of how data is managed. That is where the cloud interface enters the picture of cyber liability – but more will be discussed on a later date.
Cyber insurance coverage for cyber-attack events and for negligence must spell out clearly the liability thresholds of the coverage. Considerations should address monitoring, risk assessment to prevent gaps in coverage, lower deductibles with the use of encryption, phishing attacks, negotiating sub limits for potential claims, coverage for legal representation, and forensic analysis. One needs to be aware that claim coverages have set sub limits, for instance $250,000 sub limit under a $1 million policy. Looking for a policy feature allowing for adjusting the sublimit will be beneficial. Look for policies that feature reductions in premiums with the implementation of company security and monitoring practices.
A current review of your business’s liability policy should be done to assess gaps to enhance internet security. The implementation of riders may be helpful but a comprehensive assessment for vulnerabilities would pay off in the long run. A startup’s cyber insurance should have a provision for regulatory compliance and expenses.
As with any startup, it’s too early to tell the level of cyber exposure. Startup cyber insurance could be relatively feasible in the early stages and could give a peace of mind. As entrepreneurs venture out it’s sound to discuss with a knowledgeable person about risks on how the business will engage the public and how it will cull information created by transactions and records of the business’s daily activities. Cyber liability insurance will become a concern before you know it.