Cyber insurance protects businesses from electronic risks like internet-based or IT infrastructure-related risks. It offers various coverage options to manage cybersecurity risks and threats, both before and after a breach. But why is it necessary?
Cyber risk is increasing, with recent cyberattacks on large and small businesses, including Twitter, Uber, DoorDash, Microsoft, Ronin, and Red Cross. The global pandemic has made things worse, and insuring against it has become more complicated. However, cyber insurance has evolved to offer innovative solutions for new cyber claims. It covers errors and omissions, network security, media liability, and business interruption, providing a unique combination of coverage options.
All organizations should have cyber insurance as it covers damages caused by hackers, including both first-party and third-party incidents.
Secure your business with cybersecurity. Data breaches in the US can cost over $4M on average. Criminals target vulnerable companies with advanced techniques to gain access to networks and steal personal information. Protect your business with cyber insurance, especially in certain industries.
Check your policy documents to confirm what’s covered by your cyber insurance. Here are some scenarios that are typically covered, and some that aren’t. Read more about cyber insurance coverage here.
Insurance can protect your electronic data from damage or theft, including data belonging to others on your computer. This coverage applies in cases of hacker attacks, viruses, or denial of service attacks. It can also cover restoration costs and hiring outside experts.
Cyber liability policies cover income and extra expenses resulting from computer system interruptions. This differs from commercial property policies which cover interruptions from physical damage to property, but not electronic data.
Cyber extortion coverage protects your business if a hacker threatens to damage your data or shut down your computer system unless you pay them. The coverage can also apply to expenses you incur to respond to the demand and the money you pay the extortionist.
Insurance policies can cover expenses related to data breaches, such as hiring lawyers to comply with laws, providing credit monitoring services, setting up call centers, and managing your company’s reputation. This is known as Crisis Management coverage.
Here are some claim examples that illustrate what Crime Insurance covers:
SellYouLater hired a third-party service provider. A thief stole two laptops from the provider with data of over 800,000 SellYouLater clients. SellYouLater spent about $5,000,000 on notifying and managing the crisis for affected clients.
A US IT company hired an overseas vendor who left default settings on their server. A hacker exploited this for $20,000 and threatened to expose millions of user records if not paid more. Total costs could exceed $2M.
An intern released a virus that caused an 18-hour shutdown of a computer consulting and outsourcing firm’s systems. The company had to spend approximately $875,000 to repair their system and cover business interruption expenses.
SaaSyAttitude, a SaaS platform, had credit and debit card numbers, names, addresses, and phone numbers stolen. This exposed over 365,000 customers’ records. The organization settled with the state attorney general and must now offer free credit monitoring, credit restoration, and reimbursement for losses resulting from identity fraud. They must also improve security policies, implement safeguards, and conduct compliance audits.
Insurance companies update their cyber policies as technology changes. But organizations need to do more to meet the requirements for cyber coverage.
Company leaders must train their staff and provide updated networks and security systems to promote cyber responsibility. A healthy cybersecurity culture begins with leaders and trickles down to the team. Data backup, secure configuration settings, and analyzing cyber risks are all crucial for a comprehensive cyber insurance policy.
Cyber insurance doesn’t cover some claims like other insurance policies. Exclusions apply.
Remember to assess any gaps in your insurance coverage for cyber-related losses. Lawsuits often involve claims that are not covered by non-cyber policies, which can lead to “silent cyber” incidents. Speak with a trusted commercial insurance broker to ensure proper coverage.
Cyber insurance cost depends on various factors, just like other commercial insurance policies. Carriers consider these points to calculate your premium.
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