A significant gap in insurance coverage could leave many small businesses vulnerable to cyber risks. This issue matters to everyday people because it affects the stability of local businesses, which are essential to our communities.

The Hidden Risks for Small Businesses

Many small businesses rely heavily on technology to operate. However, cyber threats are rising, and traditional insurance policies may not cover these risks. Adam Suplina, a director at Pacific Indemnity, highlights a critical concern: most management liability policies separate cyber exposure from other types of coverage. This means that when a cyber incident happens, small business owners might find out too late that they lack the necessary protection.

The Consequences of Inadequate Coverage

When directors and officers (D&O) face cyber threats, the fallout can be severe. If a cyber event leads to a breach of data or a security incident, directors can be held personally liable. This personal liability often isn’t covered by their D&O insurance if cyber risk is excluded from their policy. As a result, many small business owners may face significant out-of-pocket expenses if they find themselves in such a situation.