In the digital world that so many businesses operate in today, it’s necessary to insure more than just physical property. Businesses must protect their digital data, as well. Here’s a look at the protections that commercial property policies usually provide Massachusetts businesses with -- and why most businesses should consider getting cyber insurance.

Is Sufficient Cyber Insurance Coverage Included in My Massachusetts Business’ Commercial Property Policy?

Commercial Property Insurance Generally Protects Physical Property

Commercial property insurance is aptly named. It generally protects commercial property -- that is physical property owned by a business. (Exactly what physical property is protected can vary, and depends on a policy’s terms and conditions.)

Most commercial property policies today include some coverage for computers. This may be included as an explicit protection for computers, or computer coverage might be folded into broader coverage for electronics.

Commercial property policies’ computer coverage, like these policies’ other coverages, is typically limited to physical components. A commercial property policy may protect computers and related hardware from potential dangers, but they rarely offer any protection for the software or information stored on computers. Additionally, they also usually don’t provide any coverage for data stored in the cloud, or data that’s not lost but is compromised.

Cyber Insurance Protects Data from Potential Perils

Cyber insurance is designed to fill this coverage gap, providing protection for data. As is the case with other types of insurance, the exact protections that a cyber liability insurance policy affords can vary. In general, though, they help guard against data breaches and data losses. A good policy will usually cover both an online hack and a forgotten device that an employee left in the local cafe, as well as many other incidents.

Some particular coverages that a cyber policy might afford include coverage for:

• Revenue losses directly caused by a covered incident
• Revenue losses that result from a tarnished reputation
• Compensation that affected clients or customers are owed
• Credit card monitoring for affected clients or customers
• Hiring programmers to identify and address potential system weaknesses that were exploited

In short, cyber liability insurance works in conjunction with commercial property insurance. While commercial property policies normally protect hardware, cyber liability policies typically cover the software and information stored on that hardware.

Most Businesses in Massachusetts Should Have Cyber Liability Insurance

Not long ago cyber liability insurance was a somewhat obscure form of insurance that only a few businesses had. As businesses become increasingly reliant on digital data and the threat of cyber attacks continues to grow, however, this insurance is becoming more and more important. According to a 2016 survey by IBM, the average cost of data breaches ranges from $3.8 to $4.4 million -- an expense that few businesses in Massachusetts can afford. Cyber liability insurance can help businesses mitigate this potential cost if they ever have a covered breach.

Request Quotes for Cyber Policies from Your Business’ Independent Insurance Agent

If your business doesn't yet have cyber insurance, talk with an independent insurance agent. Most Massachusetts insurance agents that specialize in commercial insurance are familiar with cyber policies, and an independent one can help you request quotes from multiple insurers. Having multiple policies to review will make it easy to select the one that provides all of the cyber liability protections your business needs at an affordable price. You may even find an insurer that will offer a robust policy at a discount if you also get commercial property insurance or another coverage through the insurer.