For business owners, investing in a cyber insurance policy is often overlooked when it comes to purchasing yearly or monthly coverage. However, having cyber insurance is necessary to cover defense costs as a result of network security failure, data loss, and more. In this day and age, protecting sensitive customer data is crucial to maintain trust.
However, cyber exposures have become more common over recent years. In fact, the incidence of malware attacks has increased by 358% in 2020 according to a research study by Deep Instinct. In addition, ransomware has increased by 435% compared to 2019. Because of this, cyber liability insurance comes highly recommended for larger businesses.
Simply put, a cyber insurance policy covers the financial losses that can occur due to data breaches and some technical errors that impact a business.
Businesses that deal with sensitive customer information, such as Social Security numbers, credit card numbers, bank account numbers, and medical records will need to deal with expenses related to the investigation, notification, recovery, and post-recovery activities that come after a security breach
Depending on the type of liability policy you choose, there are two types of major cyber security insurance to cover common risks. While first-party cyber liability insurance helps you respond to data breaches that occur on your local network, third-party cyber liability insurance helps pay for expenses that occur on a client's network or computer systems.
In terms of cyber risk insurance, this type of coverage pays for immediate expenses including:
Third-party cyber insurance coverage addresses risks that occur due to lawsuits and legal claims.
In addition to this, your cyber liability insurance policy might also provide risk mitigation products to help prevent cyber threats before they occur in the first place. Privacy breach coaches and other providers can help coach employees and small business owners on how to better protect their company's systems.
Most cyber liability policies also provide insurance coverages for the following liability claims:
Depending on the insurance company you choose, your policy might provide some coverage for crisis management. Otherwise, your company might need to cover the cost of hiring an attorney, public relations expert, or data forensic expert to determine the scope of the cyber threats impacting your organization.
Cyber insurance covers the cost of replacing data, computer programs, and software that has been damaged after a data breach, virus, or other covered cyber attacks.
Data breach insurance coverage can also include the cost of informing relevant parties after their personal information is impacted by a data breach, which is a legal requirement for most states.
Some cyber insurance coverage options also address coverage needs like fines and penalties that can occur due to data breach laws, as well as the cost of hiring a legal attorney.
However, cyber liability won't cover all business costs related to claims. Some common exclusions include:
While cyber liability insurance is generally designed for larger businesses, even a smaller organization can benefit from coverages. In 2019, the majority of data breaches impacted businesses in the healthcare sector, making it a key investment for those who operate in this area.
To figure out how much coverage you need for your business, you'll need to quantify the amount of cybersecurity risk you have. While financial industries tend to have this covered, companies in other industries like education and manufacturing should evaluate their own needs, depending on the sensitivity of the information they store on servers.
This resource provides a quick guide for employers who want to test their understanding of cybersecurity topics and look into cyber insurance policies for their companies.
When you compare it to other types of business insurance, the cost of cyber insurance tends to be on the higher side due to the potential fallout. The costs of dealing with the aftermath of a cyber incident include public relations costs, damaged hardware, and software, and expensive legal claims.
As a result, cyber insurance policies are especially important to add on top of your typical business insurance coverage. For a comparison of other business insurance policies to prevent your customers and employees from being at risk, contact us today at Assured Standard.
