Cyber attacks and hackers are becoming more and more prevalent by the day, threatening the security of many businesses. According to Sophos, 54% of companies say their Information Technology (IT) departments are not sophisticated enough to handle advanced cyberattacks on their own. Many companies counteract this very real threat by enhancing their security measure, especially by investing in cyber insurance. Cyber insurance works like any other form of insurance and protects companies in the case of a data breach, cyber attack or any other cyber threat. Even though this sounds good, who exactly is cyber insurance for? Is it truly necessary and is it right for your company? Find out below as we explore the world of cyber insurance so you can find out if it’s the right fit for you and your business.
What is Cyber Insurance?
Cyber insurance also known as cyber security insurance, is a liability plan that protects businesses from computer-related crimes, electronic threats, and data breaches. Cyber insurance companies are becoming more essential, especially with the rise of hackers and the ever-looming threat of cyber terrorism. Cyber insurance companies help businesses minimize disruptions in the workplace and help them get back on track. They usually cover any financial losses related to a cyber attack and cover any legal related fees.
Who Needs Cyber Insurance?
Almost every business in this day and age could benefit from cyber insurance. If you own a business that houses electronic data, has an online element, and/or relies on technology for day-to-day operations, then you most likely need cyber insurance. If your systems have sensitive data such as social security numbers, addresses, driver’s license numbers, etc. that could be stolen during a data breach, cyber insurance is indispensable. If you’re worried about the possibility of hackers or cyber attacks, then cyber insurance is a worthwhile investment for your business.
What Does Cyber Insurance Cover?
Cyber insurance companies cover a vast array of expenses, but it largely depends on the specific policy. Cyber insurance typically covers legal fees, notifying customers about a data breach, data recovery costs, and computer damage repair costs. They also tend to cover ransom demands, identity recovery, system forensics, phishing scam costs, and sometimes fraud. As long as the cyber attack falls under the umbrella of phishing, malware, ransomware, hackers, cyber crime, etc., cyber insurance most likely covers it. It’s also worth looking into business interruption insurance and/or property insurance policies, which sometimes include cyber insurance in the bundle.
What Doesn’t Cyber Insurance Cover?
It’s important to keep in mind that cyber insurance should never take the place of cyber risk management. Cyber insurance companies are meant to complement the cyber security plans a business already has in place. Cyber insurance policies normally don’t cover issues that are caused by human error, negligence or were preventable in general. Any data breaches that occurred before the policy goes into effect and insider attacks are excluded. Cyber insurance also doesn’t cover preexisting vulnerabilities, poor security processes, human error, and costs related to improving a system’s cyber security defenses. Sometimes cyber insurance won’t cover major catastrophic events such as cyber attacks considered acts of war, state-sponsored attacks or an attack that costs upwards of a billion dollars.
Cyber Insurance Costs
Cyber insurance companies have several different policies available, and the cost largely depends on the annual revenue and the size of the business. If you own a business dealing with health or finance, these policies will usually end up being more costly since these fields house a lot of sensitive data and are at a greater risk of experiencing a cyber attack. Other elements companies take into consideration is the security of the network, the specific industry, and the type of data that’s handled. If a business has a history of frequently being attacked by hacker, falling victim of data breaches, then their policy will be more expensive. Also, if a business has an extremely vulnerable network and/or poor cybersecurity procedures in place, then their policy will cost more as well.
Cyber attacks and data breaches are becoming more common overtime so it’s becoming crucial for businesses to have security measures in place to prevent this from happening. Even though your network may seem bulletproof, hackers are becoming smarter, and threats are always looming. According to Nationwide, 55% of small businesses have experienced a data breach while 53% have experienced multiple breaches. Cyber insurance policies are becoming more essential for businesses, especially if they have sensitive data, operate online, and rely on technology. Any business could benefit from cyber insurance, especially since they cover an array of costs resulting from a cyber crime. It’s important to keep in mind that cyber insurance won’t cover issues stemming from human error and poor security. More times than not, these policies are affordable depending on your needs. Look into investing in cyber insurance if you wish to strengthen your cyber security moving into the future.