Every company that uses computer systems and networks is exposed to cyber risks, making cyber insurance all the more important, so what is it exactly, who should get it, and how?
What is cyber liability insurance?
Cyber liability insurance provides businesses with a combination of coverage options to help protect the company from data breaches and other cybersecurity issues.
Cyber breaches are getting more sophisticated and more widespread to the point where it’s no longer a question of “if” your company would suffer a breach, but of “when will it happen”
To stay on the safe side, every organization should consider getting good Cyber liability insurance, one that covers the company’s specific risk through a custom-tailored policy.
In case of a breach, the job of a cyber liability insurance is to reimburse your business for :
- Computer forensics experts
- Potential business losses
- Extra expenses that might occur during restoration
- Costs associated with recovering data
But how can you determine if you actually need cyber liability insurance?
Who needs cyber liability insurance?
The answer is simple here, if you and your employees use computers and mobile devices regularly, you should get cyber liability insurance. This simple definition should encompass Every type of organization, from small businesses to global companies that use technology to do business.
The need for such services becomes more apparent when your use of advanced technology becomes more critical to doing business and performing daily tasks, or when you regularly gather and store sensitive data, such as :
- Storing customer and employee data,
- Accepting credit card payments
Keep in mind that cyber insurance is not an on-time purchase or a one size fits all solution, it’s a service that needs to be provided in accordance with your specific needs and risk exposure. And it should always keep pace with new technological development as well as your business growth.
What does cyber liability insurance cover?
The costs associated with a cyber breach can be devastating to a business, without insurance coverage, the business would be alone facing lost income due to the downtime after the attack, the cost of notifying clients, recovering data, and the cost of computer and system repairs.
These costs vary depending on the size of the company and the severity of the breach, but it’s always an undesirable situation that no business wants to find itself in.
Cyber liability insurance can be a crucial safeguard against this kind of devastating outcome, Policies offer customized insurance solutions associated with the breach, depending on your business’s level of risk
There are a variety of coverage options available through cyber insurance policies. Some of these coverage options include:
- Forensic investigations costs
- Litigation expenses
- Regulatory defense expenses/fines
- Business interruption
- Cyber extortion
- Costs of system betterment
Forensic investigations costs:
After a cyberattack, it’s often necessary to conduct a forensic investigation to determine the scope and nature of the attack. This can include hiring a third-party forensic investigator to analyze your systems, data, and other digital assets. Cyber insurance policies can provide coverage for these costs, which can quickly add up.
If your business is sued as a result of a cyberattack, cyber insurance is designed to cover legal defense costs. This can include hiring a lawyer, court fees, and any settlements or judgments that may be awarded.
Regulatory defense expenses/fines:
Depending on the nature of the cyberattack, your business may be subject to regulatory investigations or fines. Cyber insurance policies can provide coverage for the costs of defending against these regulatory actions, as well as any fines that may be imposed.
A cyberattack can cause significant disruption to your business operations, leading to lost revenue and additional expenses. Policies should cover these losses, including the costs of business interruption, lost profits, and extra expenses incurred to keep your business running.
Cyber extortion is when a hacker demands a ransom payment in exchange for returning access to your systems or data. Cyber insurance policy options may include coverage for these types of extortion payments, as well as any costs associated with negotiating with the hackers.
In the event of a cyberattack, it may be necessary to upgrade or improve your computer systems to prevent future attacks. Cyber insurance policies can provide coverage for these betterment costs, helping you to strengthen your defenses against future threats.
Optional insuring agreement:
Finally, some cyber insurance policies may offer optional insuring agreements that provide additional coverage options. One such option is coverage for the costs to improve a computer system after an attack, as mentioned above. Other optional coverage options may include coverage for social engineering fraud or reputational harm caused by a cyberattack.
How to get cyber liability insurance?
To get insurance coverage, it’s necessary to fill out an application, and applications in this particular field are getting longer than ever. That’s because they get into a tremendous amount of detail, carriers want to know about controls that you have in place. They want to know about up-to-date active firewalls, and active antivirus software on all computers, networks, and mobile devices. In addition to multifactor authentication on all your network systems, programs, emails, and VPN access points.
As a business owner, you should keep in mind that applications are warrantied statements. So, unless you’re an IT professional, it is advisable to review the applications with your IT service provider to avoid any misstatements or misleading statements that could lead to a denial of coverage.
Overall, in this day and age, with the constant threat of attack, there’s no going around cyber insurance. It is an important tool in protecting your business from the financial fallout of a cyberattack. By understanding the available coverage options, you can choose a policy that provides the right level of protection for your business.