Many business owners assume hackers only go after big companies. The reality is that small businesses are often easier targets, and a single bad click can shut down operations for days.
HSB, a specialty insurer, published an example that shows how quickly it happens. The owner of a small drywall contracting business clicked a phishing email that gave criminals access to the company’s systems. The attackers installed ransomware, locked up the company’s data, and demanded payment.
What One Phishing Email Cost a Small Contractor
The business was offline for about a week. The losses added up to $15,000:
- $5,000 in computer and server repairs
- $10,000 in lost business income
The contractor never paid the ransom and still faced a costly recovery. For a small business, a week without email, scheduling, estimates, or invoicing can hurt cash flow quickly.
This is one company’s loss, not an industry average. But it shows that cyber losses aren’t limited to large corporations with big data breaches.
Why Small Businesses Are Targets
Criminals send phishing emails by the thousands and wait for someone to click. Small businesses are attractive because they:
- Rely on email for invoices, payments, and customer communication
- Often have no full-time IT staff
- Store customer names, addresses, and payment information
- Need their systems running to get paid
If your business uses email, stores customer information, or depends on computers, cyber exposure is part of doing business.
What Cyber Insurance Can Cover
Coverage varies by policy, so the details matter. Depending on the policy, cyber insurance can help with:
- Data breach response, including forensic investigation and customer notification
- Ransomware and cyber extortion response
- Restoring or recreating damaged data and systems
- Lost income during a covered business interruption
- Legal expenses and liability claims related to a breach
Some exposures, such as fraudulent wire transfers after a fake invoice or a spoofed email, may be limited or need to be added. That’s worth checking before you need it.
Your Other Policies May Not Respond
Many owners assume their property or general liability policy will cover a cyber attack. Those policies often exclude or sharply limit cyber and electronic data losses. A dedicated cyber policy, or a cyber endorsement with adequate limits, is usually what fills that gap.
Simple Steps That Reduce Your Risk
- Turn on multi-factor authentication for email and banking
- Back up your data and keep a copy offline or in a separate cloud account
- Train employees to pause before clicking links or opening attachments
- Confirm any change in payment instructions with a phone call to a known number
Insurers increasingly ask about these controls on cyber applications, so they can help with coverage as well as security.
How Hanlon Insurance Agency Helps
Our executive officers hold the CPCU and CIC designations. We review your current policies to see what cyber coverage you have, where the gaps are, and whether your limits fit how your business actually operates. Learn more about our business insurance services.
Book a 15-Minute Consultation, or call or text us at (973) 909-9889.
Source: HSB, “On the Hook,” drywall contractor example. Individual loss example, not an industry average.