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Cyber Liability Insurance – the Safety Net Small Businesses Need

At long last, the wider public is starting to realise that hackers aren’t hooded movie villains – they’re real people doing real damage across the globe, especially in New Zealand and especially to small businesses.

Microsoft reported earlier this year that cybercrime over NZ computers and networks has more than doubled over the last five years, with one in five Kiwis affected each year at a cost of $257 million in 2016 alone (1).

Small and medium sized businesses are increasingly bearing the brunt of the attacks, because they often lack the kind of robust security systems and back-up storage capabilities that larger enterprises have access to. This makes them especially vulnerable to the cyber-ransoming, where criminals take control of a server or data and demand cash or crypto-currency in exchange for a release of the information or a return to service.

Of course, the threat is greater than malware such as viruses and ransomware. The traditional hacker weapons of phishing, DDoS, cross-site scripting and session hijacking are still widely practiced and becoming increasingly sophisticated.


For a small business, the consequences of a cyber crime event could be devastating. Not only could they lose client data, critical operational information and network capability, but the damage an attack could do to a business’s reputation in the community could be just as harmful.

This is where Cyber Liability insurance provides a crucial safety net for SMEs in NZ, as it helps cover businesses against the expenses and legal costs that are associated with all breaches stemming from hacking or theft… including the ones that haven’t been released yet.

While Cyber Liability insurance won’t prevent an attack, it will help businesses to manage the event and get back on their feet. Benefits that are generally included are:

  • Business interruption costs
  • Data recovery and investigation costs
  • PR & crisis management costs
  • Extortion costs
  • Penalties and fines

Things that are typically NOT included are:

  • Damage to property
  • Replacement of equipment
  • Prior known facts and/or instances
  • Intentional acts

There is no magic bullet for preventing cyber crime, and even the best security systems are vulnerable to infiltration. However, a good Cyber Liability policy as part of a broader business insurance plan will go a long way towards ensuring small and medium sized businesses in NZ are able to survive cyber attacks now and in the future.

  1. https://blogs.business.microsoft.com/en-nz/2017/02/27/cyber-crime-on-the-rise-in-nz/

This is general advice only.

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