The insurance requirements for a Software as a Service (SaaS) startup are enormous. If you are a SaaS startup or you want to venture into SaaS then you will need to consider these insurance demands.
There are about five (5) principal insurance coverage for every SaaS startup and prospects and one of them is cyber liability insurance. A SaaS company will definitely face very serious threats among which are data attacks.
As a software distribution model in which the entrepreneur hosts applications and makes them available to users who can access these applications via a web browser, it is susceptible to hackers and malicious attacks.
This is an important reason why every SaaS startup needs cyber liability insurance coverage.
What is a Cyber Liability Insurance?
Cyber liability insurance is the coverage a business needs to recover from a cyberattack, data breach or any form of a malicious attack on its cyberspace. It takes care of the cost for this recovery while also covering every legal claim resulting from the attack.
Businesses that own a database or cloud storage where they store sensitive data and user documents ought to have cyber liability insurance because hackers will always find a way around the security and firewalls installed to safeguard these sensitive data.
Due to the widespread data breaches and cyber-attacks, modalities must be put in place strategically to adequately respond to the eventuality of an attack on your SaaS company and cyber liability insurance is every business owner’s response.
If you have a business that stores personally identifiable information (PII) and personal health information (PHI) then you need cyber liability insurance as a matter of urgency.
Wondering what personally identifiable information (PII) means?
Personally identifiable information (PII) includes information that reveals a person’s identity which includes the person’s name, home address, email address, phone number, date of birth, credit card number, social security number, bank account number and other details you are likely to give when filling a registration form.
SaaS companies have the bio-data of their users and this information can be the target of hackers which leads to the occurrence of data breaches.
Different Types of Cyber Liability Insurance Coverage Startups Need
There are quite a number of variations as regards to cyber liability insurance. These variations actually depend on the insurer issuing the insurance.
There is no such thing as standard cyber liability insurance for your SaaS but Judy Selby who is a cyber law expert and principal at Judy Selby Consulting LLC, says there are two obtainable in a cyber liability policy. Which are:
1. First-party Coverage
The first-party coverage variation of cyber liability insurance pays for the expenses your SaaS company may incur immediately after a breach. Some of the expenses include:
- Payment of defense costs
- Cost of forensic investigation
- Customer notification and monitoring
- Marketing and public relations response
- Cost of business interruptions
- Payment of extortion money
2. Third-party Coverage
The second variation which is the third-party coverage serves as a defense for your SaaS company against legal claims and lawsuits which will arise after a breach. These legal claims include;
- Payment of fines from regulatory bodies
- Payment of privacy lawsuits
- Media liability claims
Cyber Liability Insurance For Your SaaS Startup
The attacks businesses like a SaaS startup faces are enormous to wave away the thought of having cyber liability insurance. Your startup is the target of quite a number of cyber-attacks and insurance is needful for your business as I have outlined above.
It is important to note that some insurance companies provide risk mitigation services to help you discover and avoid a cyber attack. Also, the following are not covered by a cyber liability insurance policy:
- Loss of property or property damage.
- Social engineering.
- Criminal actions such as fraud, robbery, employee theft e.t.c
We can not over-emphasize your SaaS startup’s need for cyber liability insurance. Get your SaaS company insured against cyber attacks today.