Cyber insurance covers losses incurred as a result of cyberattacks. Here’s what you need to know about it as customers demand more privacy transparency.
Cyber insurance is insurance that covers losses incurred as a result of cyberattacks. It can reimburse businesses for the costs associated with data breaches, cybercrime, and other types of cyber emergencies.
It is an important part of doing business in a global, internet-reliant economy, and it is becoming increasingly necessary as the frequency and severity of cyberattacks grow.
Here are 24 things you should know about cyber insurance:
1. Must Have Up-to-Date Security Measures
In order to qualify for most cyber insurance policies, businesses must have up-to-date security measures in place to ensure they are mitigating vulnerabilities. This includes having things like a firewall, intrusion detection and prevention system and data encryption.
Just as with homeowners insurance, it is unlikely you are going to get a policy from a trustworthy insurer if you are at risk of attack because you don’t have the bare minimum in place to protect your data.
2. How it Functions
One of the biggest benefits of cyber insurance is that it helps to transfer the financial risk of a data breach or cyberattack from the company to the insurer. This means that if your business is hit by a cyberattack, it is the insurance company that will foot the bill, not you.
3. Cyber Insurance Is Relatively New
Cyber insurance is a type of insurance that helps protect businesses and individuals from losses caused by cyberattacks. It is a relatively new type of business insurance that helps companies of all sizes and across industries mitigate the risks and costs involved with data theft, breach and permanent loss. It is, unfortunately, a necessity in today’s increasingly tech-oriented world, where the opportunities to hack and steal are more pronounced with each passing year.
4. Different Policy Types
There are a number of different types of cyber insurance policies available, depending on the needs of the business or individual. Some common types of coverage include first-party coverage (protection for your own company’s data and assets), third-party coverage (protection from liability if you are sued by someone else), and credit monitoring and restoration services. Depending on the type of business you are in, you may need different types of coverage, so it’s important to work with an insurance broker who can help you tailor a policy that meets your specific needs.
Related Article: Cybersecurity Isn’t an IT Risk, It’s a Business Risk
5. Coverage Limits
Cyber insurance policies typically have two types of coverage limits: per incident and aggregate. Per incident limits are the maximum amount the insurer will payout for a single event, while aggregate limits are the maximum amount the insurer will payout for all events during the policy period. It’s important to understand both of these types of limits when shopping for a policy, as they can have a big impact on the overall protection offered by the policy.
6. Not Just for Large Companies
Cyber insurance is not just for large companies. In fact, small businesses are often at greater risk of cyberattacks than their larger counterparts, and they are also less likely to have the resources to recover from an attack without help. Cyber insurance can help protect small businesses from the financial ruin that can result from a data breach or other type of cyberattack.
7. Can Be Expensive
Cyber insurance policies can be expensive, depending on the size of the business and the amount of coverage desired. However, the costs of a cyber attack can be much greater than the cost of a policy, so it is important to consider cyber insurance as part of your overall risk management strategy.
8. Some Companies Offer Discounts
Some insurance companies offer discounts on cyber insurance policies for businesses that take steps to improve their cybersecurity. These can include things like implementing data encryption, training employees in cybersecurity best practices, and investing in intrusion detection and prevention systems.
Related Article: Why US Businesses Are Adopting a Zero Trust Model With Technology
9. Buy From a Reputable Insurer
When shopping for a cyber insurance policy, it is important to buy from a reputable insurer. Make sure to do your research and read reviews before buying a policy, as there are many fly-by-night companies selling subpar policies.
10. Review Policies Annually
It’s important to review your cyber insurance policy on an annual basis to make sure it still meets your needs. As your business changes and grows, your risks will change, and you may need to adjust your coverage accordingly.
11. Claims Can Take Time to Process
If you do have to make a claim on your cyber insurance policy, it is important to be patient as they can sometimes take time to process. This is due in part to the fact that cyber attacks can be complex, and an investigation into the incident may be required.
12. Costs Can and Do Vary
The costs of cyber insurance vary depending on the size and type of business, as well as the amount of coverage purchased. However, most policies start at around $500 per year for small businesses and can go up to $5 million or more for larger companies with greater risks. This makes sense, given that fraud, theft and data loss can financially cripple and potentially even bankrupt a business of any size.
13. Cost of Policy vs. Breach
While the cost of a cyber insurance policy may seem like a lot, the truth is that the average cost of a data breach is even higher. In 2018, the average cost of a data breach was $3.86 million, and it has only gotten more expensive in the interim.
Cybercriminals and the crimes they commit continue to become more sophisticated every year and the number of new programs and internet-connected devices we use gives them more opportunities to access our data.
Related Article: Privacy by Design (PbD): A Definitive Guide and Why It Matters
14. Individuals Can Buy Insurance Too
Cyber insurance is not just for businesses — individuals can also purchase policies to protect themselves. In fact, with the rise of identity theft and other personal cybercrimes, it has become increasingly important for individuals to have some form of protection.
While most homeowner’s and renter’s insurance policies do not cover cybercrime, there are a number of companies that offer standalone policies or riders that can be added to an existing policy.
15. Do Your Homework Before Purchasing a Policy
Not all cyber insurance policies are created equal, and it is important to do your research before purchasing a policy. Make sure to read the fine print and understand what is and is not covered by your policy. For example, some policies only cover certain types of data breaches, while others may exclude coverage for employee negligence or system outages.
This is why it is incredibly important for businesses to educate their employees on cybersecurity best practices since it is a company’s employees and their lack of knowledge that constitute the biggest cybersecurity threat.
16. Look for Coverage for Interruption to Your Business
One of the most important things to look for in a cyber insurance policy is coverage for business interruption. This type of coverage can help reimburse you for lost revenue and expenses incurred if your business is forced to shut down due to a data breach or cyber attack. Many policies also offer some form of crisis management assistance, which can be incredibly helpful if your business is the victim of a cyber attack.
17. The Importance of Notification and Credit Monitoring
Another important thing to look for in a cyber insurance policy is coverage for notification and credit monitoring expenses. If your customers’ personal information is stolen in a data breach, you may be legally required to notify them of the incident.
These notification expenses can add up quickly, so it is important to make sure they are covered by your policy. In addition, many policies will also cover the costs of credit monitoring and identity theft protection services for your customers in the event of a data breach.
18. Coverage for Litigation Costs
Cyber insurance policies can also cover the costs of litigation, settlements and judgments if your business is sued as a result of a data breach or cyber attack. While no one wants to think about being sued, it is important to have this coverage in place in case the worst does happen.
Related Article: Hackers Target Cryptocurrency Companies in HubSpot Data Breach
19. Additional Resources for Policyholders
In addition to the financial protection offered by cyber insurance, policies can also provide access to a number of resources that can help your business recover from a data breach or cyber attack. These resources may include IT forensic services, legal assistance and PR support.
20. All Companies Are at Risk
While no one likes to think about being the victim of a cyberattack, the truth is that it can happen to any business. No matter how big or small your company is, if you have customers or employees, you are at risk. The best way to protect your business from a cyberattack, therefore, is to be prepared. This means having a cybersecurity plan in place and investing in cyber insurance.
21. Insurance Is Part of a Multifaceted Approach to Security
There is no one-size-fits-all solution when it comes to cybersecurity, but there are a few key things that all businesses should do to protect themselves. These include investing in cyber insurance, implementing strong security measures, and educating employees on cybersecurity best practices.
22. The Cost of Cyber Insurance Varies Based on Country
Different countries are more susceptible to cybercrime and attack for a variety of reasons. Here are a few examples:
- The United States is the most popular target for cybercriminals due to its large number of businesses and high level of internet usage.
- Russia has a high number of cybercrime incidents due to its lax laws and lack of enforcement.
- China is also a major target for cybercriminals due to its large population and growing economy.
What this means is that, based on the country in which you operate and where you have your servers, you may be charged a premium for your policy.
23. Not a Cure-All
Cyber insurance is not a silver bullet, but it is an important tool that all businesses should use to protect themselves from the financial impact of a data breach or cyberattack.
While no one likes to think about being the victim of a cyberattack, the truth is that it can happen to any business. No matter how big or small your company is, if you have customers or employees, you are at risk. The best way to protect your business from a cyber attack is to be prepared. This means having a cybersecurity plan in place and investing in cyber insurance.
24. Ransomware Protection Is Key
Another important thing to look for is coverage for cyber extortion. This type of coverage can help pay ransom demands made by hackers in exchange for the return of stolen data or the prevention of its release. It can also help cover the costs of hiring a professional to help negotiate with the hackers on your behalf.
Conclusion: Be Thorough in Cyber Insurance Selection
In summation, there is a lot to unpack when it comes to cyber insurance. It is important to understand the different types of coverage available and what each one covers. You should also be aware of the factors that can affect the cost of your policy, such as the country in which you operate.