Small businesses are misjudging cyber risks & coverage options

When it comes to cyber preparedness, less than half of small business owners feel ready to prevent an attack and just 28% of these businesses reported having cyber insurance.

That’s according to a report from Nationwide, which also found that 40% of small business owners believe a cyberattack would cost less than $1,000. Further, 60% said it would take fewer than three months to fully recover after an attack. Nationwide reported cyber claims typically see between $15,000-$25,000 in recovery costs and the average recovery time is slightly longer than nine months.

“While we often hear about data breaches at large corporations, many cybercriminals have set their targets on small businesses that are more vulnerable and often lack the protections and resources larger organizations can afford,” Peter McMurtrie, president of commercial lines at Nationwide, said in a release. “It’s critical in today’s digital age for businesses of all sizes to have protections in place to safeguard sensitive information and prevent a breach from jeopardizing their future.”

More education needed on coverage options

Driving this low adoption of cyber insurance is a lack of awareness. Nearly one-third of small business owners said they didn’t know coverage was available to them. Additionally, around 70% of commercial line agents said their clients are concerned about cyberattacks, but less than half regularly discuss cybersecurity with their customers, according to Nationwide.

However, small business owners respond strongly when presented with options to manage their cyber risks. When told about cyber resources and products, around 75% of small business owners said they were interested in purchasing common coverages.

“When educated about the different coverage options and resources available to them, both small and middle-market business owners show high interest in cyber protection and are likely to purchase due to their increased reliance on technology,” said McMurtrie. “Now is the time for agents to be prioritizing cyber conversations with their commercial clients to protect them from ever-changing cyber threats and provide them peace of mind to focus on their operations.”

Related:

• Empowering policyholders to mitigate their own cyber risk
• 5 factors contributing to company cyber risks
• Cyberthreats remain the top business concern, Travelers reports

Join our LinkedIn group, ALM’s Small Business Adviser, a space where small business owners can gather to network, have discussions and keep up with the trends and issues affecting their industries.