Cyberattacks of all kinds are becoming a bigger threat for all businesses, therefore many are resorting to cybersecurity insurance to defend themselves from some of the consequences of a breach. But what is cybersecurity insurance, how does it function, and what are some of the factors to consider when choosing cybersecurity insurance coverage for your business?
Cybersecurity insurance, often known as cyber liability insurance, is a type of insurance that protects businesses from the consequences of cyberattacks and hacking. Cybersecurity insurance coverage can help minimize company disruption during a cyberattack and its aftermath, and it can also potentially cover the financial cost of dealing with and recovering from the incident.
However, there are some situations that cyber insurance can’t protect you from, so it’s important that you know what’s covered and, more crucially, what isn’t when you sign up for a plan. While having some sort of cybersecurity insurance in place can assist a company in the case of an attack, the company is still accountable for its own cybersecurity—it isn’t something that the insurer takes over.
Cyber insurance may be beneficial to any business that has an online component or sends or keeps digital information, as well as any organization that depends on technology to run its operations, which is nearly any business. So, if you don’t have cybersecurity insurance yet, it’s time to rethink this option.
Sensitive personal data could all be very valuable to malicious hackers who try to sneak into the network and steal it. Hackers might also potentially use ransomware to bring a network to its knees. A cybersecurity insurance policy that covers ransomware could have great significance toward helping companies that have been hit by such attacks in escaping their situation.
Digital information loss, compromise, or theft can have a negative effect on a business, along with the loss of customers and revenue. Businesses may be held accountable for losses caused by the theft of third-party information. Cybersecurity insurance is essential for organizations to protect themselves from the risk of cyber incidents, especially those linked to terrorism. Cybersecurity insurance can help with the quick recovery from cyberattacks.
Although different policy providers may provide coverage for various things, cybersecurity insurance is more likely to cover the immediate expenses involved with becoming a victim of a cyberattack. Cyber insurance policies are designed to cover the expenditures of security breaches, such as data recovery and system investigations, as well as legal fees and customer compensation.
For example, funding data recovery and system investigations would help cover some of the costs of identifying and resolving a cyberattack by bringing in forensic cybersecurity experts to properly determine what went wrong and how to fix it. This is the kind of standard procedure that precedes a ransomware attack, which is currently one of the most harmful and disruptive types of cyberattacks an organization can face.
Business email phishing scams are another type of cyberattack that can cost a company a significant amount of money, sometimes in the six figures. In these attacks, fraudsters impersonate a CEO, a supplier, or another trusted contact to deceive customers into sending money or compromising their business accounts.
When purchasing cybersecurity insurance coverage, businesses should make sure they understand exactly what they’re getting into—and that it protects the potential damage of the most common cyberattacks, such as ransomware, email phishing attacks, and distributed denial-of-service (DDoS) attacks.
Some things that are valuable to businesses aren’t usually covered by cyber insurance, and it’s critical to understand what isn’t covered so that these valuables can be adequately protected. When compared to the genuine amount of danger, cyber insurance is still somewhat limited. So, don’t expect insurance to cover all types of cyber danger.
Cyber insurance does not cover the financial expenses of losing intellectual property, nor does it cover the reputational damages that can be suffered as a result of a cyberattack. For instance, cybersecurity insurance may cover the expense of dealing with the immediate aftermath of a cyberattack, but the company may lose business in the long run, owing to the public image of weak cybersecurity. Cyber insurance coverage will not cover the expense of losing clients as a result of a negative reputation coming from a cyberattack.
The future of cybersecurity will constantly evolve as cyberattacks and attackers become more aggressive with their operations. Plan for your company’s security today with cybersecurity insurance.