Cyber insurance: Understand the basics
In today’s digital age, the cyber security threats are a real and growing concern for businesses of all sizes. From phishing scams to ransomware attacks, cybercriminals constantly find more effective ways to exploit vulnerabilities in your computer systems and IT network security infrastructure. That’s why senior leadership in company IT teams must understand the basics of cyber insurance.
In order to help you understand the basics of cyber insurance, we’ll cover what it is, why it’s important, and what you should look for when evaluating different insurance coverage.
What is cyber insurance?
Cyber attacks can destroy small businesses and organizations of all sizes. They result in significant financial losses, reputational damage, and even legal liability. In response to these emerging threats, cyber attack insurance has emerged as a vital tool to mitigate cyber incidents risks and costs. A cyber insurance policy usually covers losses resulting from malware attacks, phishing attacks, supply chain attacks, and other cyber attacks or data breaches. Cyber policies cover a wide range of costs, including:
- Notification and credit monitoring costs: If you experience a data breach, you may be required by law to notify affected individuals and provide them with credit monitoring services. Cyber coverage can cover these costs.
- Legal fees: If your business is sued due to an attack, cyber insurance policies can cover the cost of legal fees and other related expenses.
- Business interruption: If your business operations are disrupted by an attack, cyber coverage can cover lost income and other expenses.
- Data restoration: If your data is lost or corrupted due to an attack, cyber insurance policies can cover the cost of restoring your sensitive data.
We recommend that you thoroughly review the coverage for your specific insurance policy because coverage varies for all plans.
Difference between cyber insurance and cyber liability insurance
Cyber insurance and cyber liability insurance are terms often used interchangeably, but they actually have different meanings.
Cyber insurance is a type of insurance policy that covers losses related to cyber attacks and other cyber risks. It can cover a wide range of incidents, including data breaches, and new cyber threats, cyber extortion, and business interruption caused by cyber incidents, such as a ransomware attack. Cyber policies may also cover legal fees and other expenses related to cyber incidents.
Cyber liability insurance, on the other hand, specifically covers liability arising from cyber incidents. It provides coverage for damages and legal expenses from a data breach or other cyber event. This results in the unauthorized release of customer information and other sensitive information. Cyber liability insurance may also cover expenses related to notifying affected customers and individuals and providing credit monitoring services. Makes sure that the proposed coverage is clearly identified on your cyber liability insurance quote.
Why is it important?
As cyber threats become increasingly sophisticated, it’s not a matter of if but when your business will be targeted by a cyber attack. For small business owners especially, attacks can be significant. Costs can rise due to data loss prevention and recovery, business interruption, legal fees, and reputational damage. This is why cyber insurance is essential to protect your business. It covers losses resulting from cyber attacks or data breaches. There are several reasons why cyber attack insurance is essential for businesses of all sizes.
- Cyber threats are on the rise. The latest cyber threats are becoming increasingly sophisticated. It’s not a matter of if but when your business will be targeted by an attack.
- Cyber attacks are expensive. Attacks can be significant, including costs associated with data recovery, business interruption, legal fees, and public relations for reputational damage.
- Traditional policies may not cover cyber attacks. Traditional insurance policies, such as general liability and property insurance, do not cover cyber attacks losses.
- Customers and partners may require it. Your customers and partners may require cyber insurance as a condition of doing business with you.
- It can help with compliance. Depending on your industry, you may be required to have cyber insurance as part of your compliance obligations.
What factors to consider when evaluating different policies?
When evaluating cyber coverage for your business, it’s worthwhile to carefully consider a range of factors. This is to ensure that the policy meets your specific needs and provides adequate protection in the event of a cyber attack. With so many different policies and options available, it can be challenging to determine which policy best fits your organization.
To simplify the process, we’ve listed six key factors to consider when evaluating policies. By knowing what to focus on, you can make a more informed decision and select a policy that provides the right level of coverage and support for your business.
So, whether you’re a small business owner or a large enterprise, keep these key factors in mind when evaluating policies:
- Coverage limits. Make sure the policy provides sufficient coverage for your business needs. Consider the potential costs associated with a cyber attack or data breach, including lost income, legal fees, and reputational damage.
- Exclusions. Review the policy’s exclusions carefully to understand what is not covered. For example, some policies may not cover losses resulting from social engineering scams or attacks on third-party vendors.
- Deductibles. Understand the deductible structure and how it impacts your out-of-pocket expenses in an attack.
- Incident response. Look for a policy that includes incident response services, such as forensic investigations, public relations support, and legal counsel.
- Risk management. Consider policies that include risk management services, such as employee training, vulnerability assessments, and security audits.
- Reputation coverage. Some policies may provide coverage for reputational damage resulting from an attack. This can be particularly significant for businesses that rely heavily on brand reputation.
- Compliance coverage. Look for policies that cover regulatory fines and penalties resulting from a cyber attack.
As the threat of cyber attacks to steal data only continues to grow, it’s essential for your organization’s senior leadership and IT team to understand the basics of cyber security solutions and insurance. By understanding what cyber insurance is, why it’s so vital, and what to look for when purchasing a cyber risk policy, you can better protect your business from the potentially devastating consequences of a cyber attack and compromised data.
Remember, cyber insurance is just one piece of the puzzle when protecting your computer system or business from cyber threats. It’s a must to implement strong cybersecurity measures, such as regular software updates, employee training, and security programs and access controls. However, cyber insurance can provide small businesses and other organizations with an added layer of protection and peace of mind in the event of a data breach.
If you’re unsure about what type of policy is right for your business, it’s a smart idea to consult with your managed services provider cyber security team to start your discussion about cyber insurance.
Visual Edge IT, Inc. (VEIT) specializes in managed IT services and security, cloud computing, and print/copy solutions for businesses across the U.S. including remote office locations. We offer a full line of office technology and services including 24/7 remote monitoring and administration of networks, service desk, and data backup and restore to improve business processes across various industries. Plus, Visual Edge IT™ represents the industry’s leading manufacturers of office technology allowing businesses to get equipment, supplies and service from a single source. Backed by more than 20 years of technology service and a national network of expert engineers, VEIT is uniquely positioned to support business technology needs. The company is headquartered in North Canton, OH, USA. Request your no-obligation assessment today and get a free dark web analysis.