Trends in Technology
Cybersecurity Insurance | Cybersecurity is one of the major issues organizations face in the digital era. Malware, phishing, SQL injection, and several types of attacks and data breaches lead to lost revenue, data theft, threats, and business disruptions. As a result, organizations are turning to cybersecurity insurance to transfer some of the financial risks and seek coverage for the business downturn and reputation damage.
In this post, we’ll share what cybersecurity insurance is, how it works, and how it can benefit organizations.
What Is Cybersecurity Insurance?
No business is immune to cybercrimes. As a result, organizations are looking to mitigate some of their network security risks and reduce potential business losses. Cybersecurity insurance is a viable solution that protects and covers organizations from the consequences of cyber-attacks and security threats. It covers some or all of the financial cost of business disruption, depending on the policy.
Since most businesses have an online component and rely on technology to conduct their operations, cybersecurity insurance is rapidly becoming an essential part of any risk management program. Organizations have to protect personal data, including contact information of customers and employees, sensitive financial and production information, intellectual property, etc.
How Cybersecurity Insurance Works
Cybersecurity insurance is similar to general business insurance, such as commercial property insurance, health insurance, car insurance, liability insurance, etc. Policies transfer some of the financial risks from the business to the insurer, and you pay them a certain fee for this coverage.
What Cybersecurity Insurance Covers
Cybersecurity insurance is different from general liability insurance because it doesn’t cover bodily injuries from your equipment, services, or operations. Instead, it typically helps with:
- Data breach notification
- Personal identity notification of affected customers or employees
- Data recovery
- Damaged equipment (server, computers, etc.) repairs
- Network security protection
- Credit monitoring
- Legal defense
- Forensic investigations
- Public relations
What Cybersecurity Insurance Doesn’t Cover
Understanding what this insurance typically doesn’t cover is equally important before purchasing any policy to protect your assets. As with any insurance policy, there are several coverage exclusions. These include:
- Lost profits in the future
- Loss of business value due to intellectual property theft
- The cost to upgrade or improve technology solutions or new IT solutions
Additional Information About Cybersecurity Insurance
Most businesses understand that at its core, cybersecurity insurance is a risk management strategy businesses use to mitigate some of the financial risks to the policy provider as mentioned above. However, there are other things you need to know about it. These include:
§ Different Markets
The first thing you need to know is that cybersecurity insurance varies from market to market. For instance, it is more mature in the United States than in Europe, mainly because of mandatory data-breach-notification laws. Moreover, outsourcing insurance to a third party isn’t as common in Europe as much as the US. However, things are rapidly changing, especially after the introduction of GDPR.
§ The Importance of Clear Wording
When you’re planning to invest in cybersecurity insurance, investigating the risks the company covers is crucial. Many policies contain overlaps and may not meet your coverage requirements. At the very least, the insurance company should offer a policy that offers multifaceted responses, including notification, PR, forensics, and legal response.
§ Not a Complete Solution
Unfortunately, this insurance type doesn’t excel in covering intellectual property theft, reputational damage, and business loss due to a security breach. This is because the real long-term loss due to a security breach is impossible to gauge.
Benefits of Cybersecurity Insurance Policies
Different companies have different requirements. For instance, larger organizations usually opt for extensive coverage policies, whereas small businesses stick to the basics. You should understand these different coverage options’ importance and how they can benefit your company.
Let’s look at the benefits some of these policies offer:
1. Data Breach Coverage
First and foremost, your policy provider is required by law to notify you in the event of a security breach. The company identifies the threats and fixes the security issues. In case of data theft, they offer protection from potential legal action. The basic coverage protects you from exposures and safeguards your data from hackers and cybercriminals.
2. Cyber Extortion Defense
In most cases, businesses have to deal with ransomware and malicious software to protect their key data. Cyber extortion defense coverage becomes a critical policy for organizations that frequently face these attacks to recoup their losses.
3. Legal Support
Organizations that suffer from cyber attacks usually seek legal assistance, which is expensive, especially for small organizations. Legal support through insurance can help businesses afford the legal process to ensure continuity. Moreover, this coverage also helps protect businesses from damaging customer lawsuits.
4. Forensic Support
The first step following a cyber attack is an extensive investigation to help businesses determine the extent of the breach, the cause, and the impact. This coverage can reimburse the forensics cost and help businesses seek out expert advice from top security firms. Depending on the insurance company, you can also opt for 24/7 support from security services to prevent hacks or data breaches.
5. Reimbursement for Business Interruption Loss
Cyber-attacks usually lead to IT failure. This can affect all levels of business operations and impact employee productivity. As a consequence, companies lose valuable time and money. This coverage covers your losses during the failure and in many cases also covers the additional costs of operating losses due to a cyber-attack.
Businesses now understand that cyber threats aren’t going away but only getting stronger every year. To protect your assets, you must prepare yourself for a potential attack. Cybersecurity insurance is becoming increasingly important each day despite being a new offering.
However, to choose the right policy for your company, you must closely review the coverage plans companies offer and ensure they contain all the necessary provisions and protections.
For more information on cybersecurity insurance and trending business practices, we recommend visiting Percento Technologies.