Business insurance: the covers you didn’t know you needed

Revolut Contributor

 · 01/28/2021  · 01/28/2021

It may come as a surprise, but public liability, professional indemnity and employers liability are now not enough to completely protect your business. However, there are covers out there that will secure your business further; you may just need to do a little digging to find out about them.

We’ve saved you the trouble with some pointers from Superscript, who we’ve partnered up with to bring you flexible, customisable business insurance that keeps up with modern-day risks.

Cyber insurance

Almost every business depends on the Internet, and has plenty to lose if systems go down or data is lost — yet 82% don’t have cyber insurance. A widely misjudged perception of the risk may be in part to blame. Worryingly, a survey conducted by Gallagher found that over 80% of small businesses didn’t believe they were at risk of being targeted by a cyber attack.

What’s the reality?

In reality, cyber attacks are underway all the time and can have devastating consequences for any business. Estimations reveal that the UK’s small businesses are collectively subject to almost 10,000 cyber attacks each day.

Although the cybersecurity market continues to grow, there’s plenty of software out there to help you protect your systems and data. But it’s impossible to be 100% safe. What’s more, with the Internet of Things (IoT) devices becoming increasingly prevalent - expected to increase from 31 billion in 2020 to 75 billion in 2025 - it’s hard to keep track of and protect against potential security flaws. To add to this, 95% of cybersecurity breaches are due to human error.

So, while businesses invest in technologies, and most IT teams plan to spend more on cybersecurity measures, insurance is often an oversight.

But the impact of a cyber attack and subsequent data breach can be far-reaching. From losing the ability to operate to reputational damage and regulatory penalties, cyber attacks can be brutal for even the most well-resourced businesses to recover from.

What is a cyber attack?

A cyber attack is an attack launched using computers against other computers or networks. They commonly aim to do one, or a combination of, the following:

  • Disable computers
  • Steal data
  • Reach other computers or networks

The goal of a cyber attack is usually financially motivated, although sometimes it may be motivated by espionage. The methods used to perform cyber attacks vary, and include:

  • Denial-of-Services (DoS) attacks
  • Malware
  • Phishing
  • Ransomware

A key thing to note is that hackers may use a combination of the above techniques to maximise the attack’s efficiency. One thing that isn’t well understood is that hackers also use people to get the job done. By manipulating you or your employees, hackers can get inside your network and wreak havoc. Social engineering — where a hacker manipulates an employee by posing as another colleague (usually someone senior) to steal either money or data — is one of the leading causes of successful cyber attack insurance claims.

What are the risks?

Inability to get things up and running

While larger businesses are more likely to have cybersecurity experts at hand to monitor and address problems, smaller companies are less likely to have the resources to enable constant monitoring and support.

What would you do if your business were to fall victim to a cyber attack and you were unable to operate your computer systems or website?

Cyber insurance can provide specialist technical support to help you quickly get things up and running.

Regulatory penalties

Understanding what constitutes a GDPR violation has been a challenge for businesses of all sizes.  However, not all GDPR penalties and fines are quite as costly as the reported €20 million fine.

Reputational damage

Cyber breaches are one of the biggest concerns for consumers. A survey by F-Secure found that US consumers consider cyber-crime related fears on par to their car getting damaged in an accident.

Unfortunately, even for companies that can make it through the technical setbacks caused by a cyber attack, the human side of things has its own challenges. Cyber breaches involving personal data require communicating to those affected. While there’s no way to control how your customers react to this news, tried and tested communications strategies are most likely to achieve the best possible outcome. Cyber insurance can provide the specialist PR and communications support necessary.

If you’re still unclear about the value of cyber insurance, check out Superscript’s  Four simple reasons to consider cyber insurance.

D&O insurance

D&O insurance (short for directors and officers insurance, sometimes referred to as management liability insurance) is an often forgotten cover. If you’re a sole trader, it’s not one to worry about, but it serves an essential purpose for all other business types.

Business decisions made by those in management positions may leave them personally liable for some pretty significant risks.

D&O cover provides three core covers:

  1. Directors’ fines, penalties and legal expenses
  2. For the company, if it needs to pay on behalf of the directors
  3. Company fines, penalties and legal expenses if the company itself is pulled into the lawsuit

Additionally, if you’re looking for investment, bear in mind that investors typically require this cover before parting with money. D&O insurance also has an essential add-on called Employment Practices Liability (EPL), which covers the company for any matters relating to your employees. This cover protects you against allegations regarding discrimination or harassment. This important add-on is widely used by employers ranging from technology to manufacturing and financial services. If you have employees, it would be wise to have EPL — it might just save you from a costly lawsuit.

If your business doesn’t have its own legal team (and most small businesses don’t), commercial legal protection can give you access to invaluable legal advice and support. It can be bought alongside another business policy, such as public liability, professional indemnity, or employers liability.

It covers the following, all concerning the settlement of a business-related legal dispute:

  • Access to specialist legal advice, including IR35 and tax enquiries
  • Fees for solicitors, barristers and accountants
  • Court fees and attendance-related costs

However, commercial legal protection doesn’t cover any compensation costs awarded to other parties as a result of the dispute. You would need different cover for this (e.g. public liability, employers liability or professional indemnity insurance).

Superscript provides flexible, customisable cover by monthly subscription for over a 1,000 business types. Revolut Business customers get 20% off cover with Superscript (T&Cs apply).

By Priyesh Mistry (Revolut Business) and Superscript.