33 billion: that’s how many records will be stolen in 2023, according to TechTarget. This number is growing rapidly—an almost 175% increase from 2018. Suffice to say, cyber attacks are everywhere now, and for most businesses the threat of an attack has become more a matter of when than if. That’s why more and more companies are turning to cybersecurity insurance to protect their data from breaches and other forms of malicious attacks.
As a cyber insurance provider, it’s critical to think through what types of businesses may need a cybersecurity policy. In this article, we’re taking a deep dive into one often-overlooked industry, independent contractors, and how they can benefit from cyber insurance.
Who Needs Cyber Insurance?
Any organization that works with sensitive data—including storing, processing, or managing—needs cyber insurance. These days, the majority of businesses store this type of data digitally. In fact, a recent McAfee study estimates that nearly 80% of organizations store sensitive data on the public cloud. In short, nearly every organization could benefit from cyber insurance.
For cybersecurity insurance companies, this presents an opportunity to expand your offerings to more businesses, including third-party vendors, contractors, and service providers. These parties not only manage their own sensitive data, but that of their partners as well, making cyber insurance doubly important.
What Type of Insurance Coverage is Traditionally Used by Contractors and Vendors?
In general, insurance companies provide many offerings that contractors use, including but not limited to:
Liability insurance
Commercial property insurance
Business owner’s policy (BOP)
Worker’s compensation insurance
Commercial umbrella insurance
Cyber insurance
When it comes to cyber insurance specifically, most vendors need both first- and third-party cyber insurance.
First-Party Cyber Insurance
For contractors, this type of policy covers cyber attacks and data breaches within their own business. For example, a bad actor could gain access into a contractor’s website to steal their clients’ payment information. First-party cyber insurance for contractors covers expenses like:
Alerting clients that a breach occurred
Acquiring data recovery services
Offering credit monitoring to impacted clients
Third-Party Cyber Insurance
This type of cyber insurance covers damages that an independent contractor may incur if one of their customers or partners is attacked. Essentially, this type of cyber insurance protects vendors from a client lawsuit. It covers expenses such as:
Paying for legal fees
Handling settlements and judgements
Acquiring crisis management solutions
Companies like Trava makes it easy for insurance providers to gauge client cybersecurity risk. With proper risk assessment, providers can create a tailor-made policy for vendors, contractors, and any other parties turning to you for cyber insurance.
Why Do Vendors Need Cyber Insurance?
No matter how big a business is or who their clients are, cyber insurance is important because it provides a layer of financial protection against increasingly common cyber attacks. In a world where 60% of small businesses fail within six months of a cyber attack, insurance could mean the difference between success and failure.
For cyber insurance providers, this is an excellent way to position your offerings as vital to any organization. But what are the cyber insurance benefits specifically for independent contractors? Here are three that matter:
Some companies have implemented cyber insurance requirements for vendors. With cyber attacks becoming more common, with estimates now showing that breaches occur every 39 seconds, businesses are looking for ways to protect their data. For a lot of companies, this means requiring that their independent contractors carry cyber insurance. As more businesses consider adding these cyber insurance requirements, contractors carrying a policy will have an edge against their competition.
Cyber insurance offers vendors—and their clients—peace of mind. Laying awake at night thinking about everything that could go wrong isn’t anyone’s idea of a good time. Independent contractors who carry first- and third-party cyber insurance have protection against attacks that occur on their own infrastructure. Insurance also provides protection against lawsuits should their client experience an attack. This grants peace of mind for every party involved in the business relationship.
Cyber insurance helps protect vendor reputation. For independent contractors, the ability to attract, gain, and retain clients is largely dependent upon their reputation. Of course, their skills are extremely important, but so is word-of-mouth referrals and recommendations. Obtaining cyber insurance protects vendors should an attack occur, and it also helps cover or protect against client lawsuits. This protection can go a long way in maintaining their reputation.
Build Better Cyber Insurance Policies With Trava
For cyber insurance providers, understanding your client’s risk level is paramount to creating custom policies that make sense for you and your client. That’s exactly what Trava empowers.
Our platform, designed specifically with cyber insurance agencies in mind, makes it simple to:
Identify potential risks
Build fast, accessible quotes
Receive actionable insights for renewal
Offer improvements based on detailed insights
Ready to see how Trava makes cyber insurance easier, safer, and more profitable? Schedule a demo today to get started.
