Cybersecurity insurance, also known as cyber insurance or cyber liability insurance, is coverage that your company can buy to reduce the risk of data loss. A cybersecurity insurance policy transfers some risk to an insurer for a price.
While all sorts of insurance have been around for decades, cybersecurity insurance is a relatively recent invention. Businesses that bought cybersecurity coverage were early adopters.
Given the ever-changing nature of cyber risks, security policy must be updated and modified frequently. Underwriters have access to data that aids in the calculation of risk and the establishment of policy rates, premiums, and coverage. It’s not as simple with cybersecurity insurance because it is relatively new and operates from limited data.
WHY SHOULD BUSINESSES PURCHASE CYBERSECURITY INSURANCE?
Data loss may inflict serious damage to an organization. It may result in clients moving away and decreased revenue for your company.
Furthermore, without cybersecurity insurance, your organization may be responsible for any losses caused by stolen or damaged data. Without a backup strategy in place, losing client data could be catastrophic.
Cybersecurity insurance is critical for businesses that want to avoid financial losses due to cyber-related risks. In addition, cyber coverage may help you recover from disasters quickly and potentially save your business.
Anyone can be a victim – big or small
In 2011, the PlayStation Network was hacked. Personal data from 77 million users was revealed as a result of this intrusion. For over three weeks, PlayStation users were unable to access the service due to the attack.
In terms of financial loss to Sony, this incident caused over $171 million in damage. If Sony had purchased a cybersecurity insurance policy sooner, they may have saved themselves some of the $171 million; but they didn’t.
The court case that followed confirmed that their insurance policy only covered physical damage, so Sony was responsible for the losses from the cyberattack.
HOW CYBERSECURITY INSURANCE WORKS
Cybersecurity coverage is available from a variety of insurance providers, including commercial property and business liability insurance companies. The majority of cybersecurity coverage protects the first party (losses that affect a company directly) as well as third-party losses (damages caused by a cybersecurity incident, depending on the organization’s relationship to the victim).
Cyber insurance will assist with any losses incurred as a result of cyber incidents and events. It can also aid in the costs associated with recovery, such as legal advice, crisis communicators, investigators, customer reimbursements, and account loss.
What doesn’t a cybersecurity insurance policy cover?
When a company buys a cybersecurity insurance policy, double-check the terms.
You may not have the coverage you thought you had, or you may even have coverage for things you weren’t aware of. Paying legal fees, notification costs, meeting ransomware demands, data recovery expenses, and so on are all examples of this. Before you put your signature to the dotted line, ensure that you’re satisfied with your insurance
Because it has only been around for a short time, policies and rates vary among insurers. As a result, businesses must carefully evaluate what they want included in their cyber insurance coverage. Different businesses will need different types of coverage.
WHO SHOULD GET CYBERSECURITY INSURANCE?
Cyber insurance is beneficial to enterprises that handle, store, or create electronic data like contacts, sales, or credit card information. Cyber coverage may also be useful for e-commerce businesses.
Insurance for cybersecurity is necessary for industries that are more likely to be targeted by cybercriminals. This includes medical and dental practices, especially those that store client data electronically.
The real estate industry also should consider purchasing cyber insurance because of the number of electronic transactions made between sellers, buyers, lenders, and other parties involved in the sale or rental of property.
Any company storing client information online will benefit from cybersecurity insurance and its liability coverage.
Can your company qualify?
Be aware that not all businesses will automatically be eligible for this coverage. You’ll need to show that you’re doing everything possible to keep your data safe. If you’re not sure if your cybersecurity measures are adequate, we can assist you in determining whether or not they are.
It’s a good idea to have your managed IT service provider assist you with the application process. We can help you determine what coverage your company needs and if your cybersecurity protection is sufficient.
The bottom line is that if you don’t have it, get it. You could end up in the same boat as Sony if you don’t. If you have any questions, please contact us for a cybersecurity consultation.