As a business owner, you’re responsible for protecting the information you store and share with customers. This includes PII (Personal Identifiable Information), financial data, and company proprietary information.
Cybercriminals can use this sensitive data to steal money or identities. They can also sell the information on the dark web.
1. Customer data theft
Customer data theft is a serious threat to eCommerce stores. It can cause damage to your reputation, lead to financial losses, and can even result in legal liability.
Data breach insurance protects you from the potential costs of a data breach by covering eligible expenses like legal counsel, notification costs, crisis communications, credit monitoring, and more. It also helps if you have a reputable cyber risk management plan in place.
The first step to preventing a data breach is understanding what type of information your business collects and how valuable it is. This will help you decide whether you need data breach insurance.
A data breach happens when unauthorized individuals gain access to personal information such as credit card numbers, bank account information, passport numbers, and social security numbers. This is commonly done through a cyberattack, but it can also be caused by human error or physical theft.
Hackers often target businesses with sensitive data, such as banks, retailers, and healthcare providers, because their systems are more vulnerable. They are able to get in through vulnerabilities, such as phishing or social engineering.
Another common way to get access to sensitive data is through the use of malware or worms. This is usually done via email, but it can also happen through malicious websites or infected USB devices.
Data breaches can be caused by a variety of different factors, including server problems, lateral movement, and privilege escalation. This occurs when a system is compromised, and the attacker gains access to more systems and accounts until they have a privileged position on the network that provides them with access to all the data they need.
Alternatively, it could be human error, such as a member of staff accidentally sending a file with sensitive information to the wrong person or attaching a document that they shouldn’t have been given. This could also happen when someone leaves a database with sensitive data online without password restrictions in place.
The main reason your eCommerce store needs data breach insurance is to help cover costs associated with a data breach. It can be a daunting and expensive task to recover from a data breach, but it’s a risk that is worth the investment. Customers will likely be reluctant to patronize a brand that has experienced a data breach in the past, so putting robust protections in place upfront is a smart move.
2. Legal Liability
Data breach insurance protects you and your business in the event that an external cyber threat affects your eCommerce store. It reimburses you for forensic investigation, legal costs, hardware and software damage, credit monitoring services, and notification expenses after a security incident.
This type of insurance is especially important for e-commerce stores and other online businesses that store sensitive customer data such as name, address, and credit card information. While it might seem like a good idea to save all of this data on your website, storing this info on a public server makes your business a prime target for cybercriminals who are looking to steal and sell your customers’ personal information to other criminals.
While this risk can be minimized by following PCI regulations at all times, it’s still important to make sure that you have the right coverage in place for a data breach. A good insurance agent will take the time to get to know your business and understand how you currently manage your risks, so they can recommend the right insurance product for your needs.
One of the most common reasons that you need this type of insurance is to cover the cost of a potential lawsuit or a fine from the government after a cyber incident. If a cybercriminal gains access to your network and then uses your customers’ personal information to commit fraud, you could be facing a serious financial loss.
A company may also face a potential civil liability suit from a customer if the hacker uses the hacked data to open up new accounts and/or make purchases on your e-commerce site. While this may sound unlikely, it’s possible for hackers to buy large amounts of stolen credit card numbers from the dark web, which they can use to order large-ticket items from your e-commerce site.
The legal liability of an e-commerce store depends on several factors, including its size, the types of products and services it offers, and how often its customers interact with the company’s website. In addition, the e-commerce business’s history of claims and the potential for lawsuits are other factors that may affect its insurance rate.
3. Cyber extortion
Cyber extortion is an increasingly popular tactic used by cybercriminals. It involves threatening victims with damaging their reputations, releasing sensitive information, or exposing their financial details if they do not pay a ransom to the perpetrators. It can have severe consequences for both the victim and the organization.
Many businesses have experienced ransomware attacks, including some that crippled their operations and forced them to shut down for a while. These types of attacks can be devastating for business operations and cost organizations a lot of money.
While there are several ways to prevent cyber extortion, the first thing any company should do is educate their employees about the dangers of scams and phishing emails. They should also train them in sandboxing techniques to avoid opening suspicious links or applications.
Another important step to take is to ensure that your eCommerce store is up-to-date with the latest cybersecurity technology. This will keep your data secure and minimize the chances of an attack occurring in the future.
You should also consider acquiring cyber insurance to help cover the costs of the damage that can be caused by a cyber extortion attempt. These policies can also protect your organization from legal liability.
If your eCommerce store is ever attacked by ransomware, it is important to have a plan in place to respond to the threat. The plan should include procedures for identifying and mitigating the attack, communicating with stakeholders, and reporting it to law enforcement.
In addition, it is crucial that you have a backup of your critical files and data. This can help you get your operations back on track after an attack.
Lastly, you should be aware of the laws and regulations that apply to cyber extortion in your jurisdiction. These laws may impose fines or penalties on the perpetrators of cyber extortion and other forms of cybercrime.
One of the best ways to keep your eCommerce store safe from cyber extortion is to update your software and firewalls regularly. In addition, you should educate your employees about phishing and spam emails. This will help them recognize these attacks and avoid opening fraudulent emails or revealing sensitive information online.
4. Business interruption
If your eCommerce store is forced to shut down temporarily due to a natural disaster, such as a flood or fire, business interruption insurance will pay you for lost income and cover extra expenses that are associated with running a business during this time.
This type of coverage is often added to a standard property policy, but it can also be purchased separately as an add-on. It can be particularly useful for businesses with large inventories or locations that are in the path of severe weather.
Friedlander says that a business interruption policy usually covers loss of income as well as associated extra expenses, such as rent, utilities, and employee payroll, while the business is temporarily closed. In addition, it may cover the cost of repairing or replacing property and equipment that was damaged in a fire or other covered loss.
Policies vary in their scope of coverage, so it is important to read the policy carefully and consult with an insurance agent or insurer to determine the exact coverage that you receive. It is also important to understand the terms and conditions of your particular business interruption insurance policy to make sure that you are getting all the protection that you need from it.
Most business interruption policies will pay out for up to 30 days, but they can be extended with an endorsement. Most policies also have a "restoration period," which is the length of time that the company must be physically restored to its pre-loss condition before the policy kicks in.
The cost of a business interruption policy depends on the amount of property and revenue that you own or lease. The size of your eCommerce business and its claims history are also significant factors.
You should also consider the location of your eCommerce site. If you ship components or finished goods to a third-party location, for example, inland marine insurance can cover the value of your inventory while it is stored at a different facility.
Another critical factor is the number of employees you have. If your business is forced to shut down, you could lose a significant number of workers who are essential to your operations. If you have many employees, you can be eligible for a business owner’s policy that includes both liability and property insurance.
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