Today’s digital world places a greater emphasis on online security. As the internet becomes more widely accessible, many people are making their private information available online. Whether done intentionally or not, it poses a social and financial threat.
Statistics show that businesses lose USD$3.86 million per data breach. That’s incredibly high, given that nearly half of the companies fall victim to cybercrime yearly. Even if you don’t lose millions of dollars, the consequences of being hacked could cause severe damage.
The best way to prevent such losses is by being extra cautious about what you share online. It’s also essential to have cyber security insurance coverage. This way, you won’t lose everything in case of an attack.
Fortunately, the cyber security insurance market is growing rapidly. The prevalence and cost of cyber-attacks have forced many businesses to purchase these premiums.
But what precisely is cyber security insurance, and what does it generally cover? Keep reading to learn more.
What is cyber security insurance?
Cyber-liability or cyber security insurance is an insurance policy that protects companies against losses as a result of cyber-attacks and data breaches. It helps minimize the downtime and other disruptions that may be experienced during a cyber incident.
Many companies today have most of their systems connected to the internet. As such, their private data is exposed to potential hackers, which makes them vulnerable to cyber-attacks.
Every company must invest in this type of insurance as part of its cyber security plan. Remember, this policy is helpful to any business regardless of size. So, whether you’re running a pop shop or a global organization, it’ll still make sense to purchase cyber security premiums.
What does cyber security insurance cover?
Insurance providers may have different limits and coverage for cyber security insurance. The terms that one company will offer you may differ from what you’ll get from other providers. Therefore, you must exercise due diligence before agreeing to a policy.
It’s worth noting that some standard features are covered by most, if not all, insurance companies. They can include the cost associated with data restoration, customer liability claims, and public relations.
Here’s a list of what cyber insurance will typically cover:
There is bound to be an interruption of normal business operations after significant cyber-attacks. For instance, your company may fail to generate revenue when the systems are down. This may slow down the payment of recurring bills, employee wages, or even suppliers.
Therefore, business interruption coverage is an essential component of any cyber insurance policy. With this, you can buy your company more time to recover from losses that occur when it can’t operate normally.
It compensates your business for any revenue lost and additional costs incurred as a result of the interruption. For instance, if you’re forced to relocate temporarily, the policy may cover the costs related to this move.
However, it’s important to remember that all the losses and extra expenses mentioned above should be related to a cyber-attack. As such, the insurance company will have to investigate and ascertain the cause of the interruption before disbursing the funds.
Most cyber-attacks target your finances, private data, or both. So, hackers are likely to steal important corporate data, or you may lose part of it as a result of the attack. The process of restoring this information can be very costly.
A cyber security insurance policy may include data recovery coverage. This covers all data restoration expenses, like the purchase of new hardware and software, as well as labor fees. It can also cover the fees paid to experts tasked with investigating the data breach.
Notification and credit monitoring
The law requires every organization to notify affected individuals of the cyber-attack. Customers, suppliers, and any other stakeholders must be informed immediately so that they can take the necessary precautions. The notification shouldn’t contain extraneous personal information to prevent further unauthorized disclosure.
This process can be very costly, especially for large companies. Notification and credit monitoring policy covers these and other related expenses. Some of the tasks covered here include setting up call centers and mailing notification letters.
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Cyber-attacks have become rampant in recent years, with many businesses dealing with huge financial and data losses. These cyber security statistics have forced most organizations to consider purchasing cyber security insurance.
The policy covers all costs associated with business interruption, data recovery, and notification and credit monitoring. If you’re running a business, no matter how big or small, make sure you invest in this insurance policy to protect it from the losses mentioned above.