Cyber Insurance: More Than Protecting Yourself Against Data Breaches
Cyber insurance is a product used to protect businesses and individuals from cyber risks like hacking and penetration of IT infrastructure and activities. This type of protection is excluded from a general liability policy. Insurance journals have been saying that cyber insurance or cyber liability insurance (CLI) is the hottest insurance product on the market since the early 2000s. However, the average small business owner still is unaware of how this product may be helpful. Some people wrongly assume that cyber crime is covered under a basic general liability insurance policy only to find out that the hacked information is gone and the damage is irreversible. So, it’s important to understand what cyber insurance is, how to purchase it and how it can protect your business. One way to buy the right cyber insurance for yourself or your business is to get multiple commercial insurance quotes, where you’ll be paired with an agent who can customize your plan for you.
What Is Cyber Insurance?
Does you business conduct transactions over the Internet? How do technology, emails and social media leave you exposed to risk? These are questions every business should ask itself because there are many gateways to cyber attacks. Cyber insurance is simply a way of transferring risk should an attack happen to your business or organization
Cyber risk insurance (or cyber liability insurance coverage, CLIC) offsets the costs involved in recovering after a cyber-related security breach or data breach. It first took shape in errors and omissions insurance (E&O), and has since grown to reach 7.5 billion in premiums by 2020. Roughly ⅓ of American companies currently purchase some form of this insurance.
Cyber insurance covers expenses related to first parties (your business) and third parties (any customers who may be affected by hacking). The following are some commonly reimbursable costs related to cyber insurance:
Investigation. An investigation needs to happen in order to determine what happened and to find out who conducted the hacking. Most hackers, believe it or not, are not very sophisticated and leave behind a trail, but it costs money to find out who they are. That’s why it’s important to involve the services of law enforcement and the FBI along with the services of a security firm who will be able to track IPs and the like. Your cyber insurance will cover costs.
Business Losses. A cyber attack may interrupt business. You may also experience data loss, which will create a crisis for your business (also costly). There may be reputation damage involved, too, depending on the type of cyber attack. All of these consequences would be covered by cyber insurance.
Theft and Fraud. This protection covers loss of the policyholder’s data as well as the transfer of funds/theft.
Privacy and notification. Whenever there is a data breach, notifications must be sent to customers and/or affected parties according to federal law. Credit monitoring for those customers may also be required. A data breach doesn’t come cheap.
Lawsuits and extortion. There are legal expenses associated with the release of confidential information and intellectual property. Your business may also be extorted using ransomware and the like.
Media Liability. Provides coverage for copyright, trademark or service mark infringement.
What Should Be Included in My Cyber Insurance Coverage?
Most of the bigger insurance companies that sell commercial insurance (Chubb, Travelers, etc.) are already offering cyber insurance to clients. Some people speculate that cyber coverage will one day be included in a standard general liability policy, but it’s important to note that as of now it’s not included.Here are some valuable tips about cyber insurance:
- A standalone policy is usually more comprehensive than one that is offered as an extension to an existing policy.
- Look at the deductibles to make sure they are manageable.
- Does the coverage apply to third-party service providers? Is this something you need?
- Does the policy cover all attacks to the company or targeted attacks only?
- Does the policy cover social engineering: phishing, spear phishing and advanced persistent threats (APTs), which can take months to years?
A Business Has Responsibilities Too
How vulnerable a business is and whether or not they follow best practices defensively are factors insurance companies take into consideration when considering coverage. Employee education for phishing and other types of social engineering are also important too. There are vulnerability assessment tools out there which can help. Sometimes, it’s helpful for a business to hire a network defense specialist to improve the security of the overall organization. Down the line, when cyber insurance becomes more commonplace, it will likely be a requirement for clients to provide an audit of the company’s defensive processes.
Does My Business Really Need Cyber Insurance?
Not only is the threat of a cyber attack not hyped up, attacks against businesses are increasing as more people gain cyber sophistication. According to a report by a security software, Symantec, over 30% of cyber attacks were launched against businesses with less than 250 employees, with the remaining 70% of cyber attacks aimed at larger organizations
So, if your question is do cyber attacks really happen, the answer is a resounding yes. Get protection by visiting here.
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