Nowadays, cybercrimes have become commonplace. One of the major cyber crimes affecting both large and small organizations is a data breach. A data breach in your company can result in major fines and expensive lawsuits. It can also tarnish your business’ reputation and put your employees at risk. This is the reason you should invest in cyber insurance.
What Is Cyber Insurance?
This is a type of insurance that protects your business against cyber risks. Cyber insurance protects your business from cybercrime activities like ID theft, a data breach, and a cyber-attack. With cyber insurance, your business has an easy time recovering from cybercrime incidents and dealing with lawsuits.
A study by PwC established that the cost of cyber insurance premiums was rising steadily. A majority of U.S. companies have cyber insurance. This shows how people are starting to understand the essence of ensuring their organizations.
What Are The Ways Cyber Insurance Prevents Cyber Attacks?
One of the ways cyber insurance helps prevent cyber-attacks is by recovering lost devices and data targeted in an attack. Quick recovery of these items will help you resume business as usual without inconveniencing your clients.
Another benefit of cyber insurance is that insurance agents will help you inform your customers about the breach and what your company is doing about it. Furthermore, the insurance agents will notify the relevant authorities about the attack to initiate an investigation.
After suffering from a data breach, it is important to assess the extent of the damage so you may execute the appropriate actions. Your cyber security agent will help you access the breach and advise you on the security loopholes.
Your insurance provider will also cover the cost of revenue loss, business disruption, and equipment damage. They will also cover costs associated with public relations expenses and legal fees.
What Is Not Covered By Cyber Insurance?
When purchasing cyber insurance, it is important to determine what is not covered. Cyber insurance does not include property and bodily damage. However, you can address these issues by buying general liability insurance.
Additionally, cyber insurance does not cover the loss of property. Losing physical property like a computer or smartphone can be addressed by buying commercial property insurance. Last but not least, cyber insurance does not cover criminal activity. Incidences like employee theft, robbery, fraud, and other criminal activities can be addressed by buying commercial crime insurance.
Does Cyber Insurance Absolve A Company Of Its Responsibilities?
One of the primary reasons a company experiences a cybersecurity incident is a human error. Hackers are on the lookout for careless employees and lure them into releasing sensitive company information.
The cybercriminals grab the unsuspecting victim’s attention through pictures, videos, and links shared on social media and emails. Additionally, phishing attacks can deceive employees because they look like they are from a trusted resource. These attacks are implemented through ransomware and malware.
While cyber insurance will help protect your company against monetary losses, it cannot protect you against employee mistakes. Therefore, the best way is to prevent these mistakes by educating your employees on standard cyber security practices. For example, employees should be warned against surfing on insecure networks, taught to use strong passwords, and instructed to avoid messages or emails from unknown sources.
Steps Involved In Purchasing Cyber Insurance?
It is important to purchase cyber insurance that is suited for your business’s specific needs. The following are some of the factors you should consider when purchasing cyber insurance:
1. Decide The Coverage Suited For You
When considering cyber insurance policies, you are faced with two choices: first-party coverage and third-party coverage. First-party coverage deals with the financial loss arising from a breach of your company’s data.
On the other hand, third-party coverage covers the financial loss arising from a data breach belonging to your customers, suppliers, vendors, and partners. Some policies are a combination of both first and third-party coverage. When purchasing cyber insurance, access whose data you want to protect so you may choose the appropriate coverage.
2. Identify Your Contractual Obligations
When purchasing cyber insurance, make sure you bear in mind your clients’ and partners’ requirements. For example, a client may provide terms in the contract that require you to buy specific cyber security coverage. Therefore, choose policies that align with your contractual obligations.
3. Access Your Risk
Cyber-attacks affect both large and small organizations. However, the potential risks for one company will vary with the potential risks for another company. Before purchasing a policy, determine the sensitive information you deal with and the type of data likely to be targeted by cybercriminals.
4. Understand When Your Policy Kicks In
Like most insurance policies, some conditions should be satisfied before your coverage comes into effect. Decide whether you are better off with coverage that deals with specific risks or general coverage. Remember, if your policy has exclusions, you may have no claim during specific cyber incidents.
Cyber insurance is indispensable for both large and small businesses. Considering the advancements in technology, cybercriminals are coming up with more sophisticated ways of executing data breaches. You must implement the necessary preventive measures and controls to protect yourself from an attack. Apart from preventative measures, you should also insure your business against the most likely cyber security risks.