Cyber security insurance protects businesses from damage and loss that could result from unauthorized disclosure of sensitive and financial data. Along with providing financial cover, it will also provide you with a safety net against any psychological stress brought on by the hacking of critical data.
What Is Cyber Insurance?
Cyber risk insurance is a type of insurance that shields your business from computer-related crimes as well as the financial repercussions of threats like ransomware, malware, data breaches and thefts, employee malice, and other occurrences. Such incidents can corrupt your data, harm your network, and negatively affect your brand’s reputation and customer confidence.
Who Needs Cyber Insurance?
Since all business today is conducted digitally, all businesses are susceptible to cyber disasters, including ransomware and other threats as well as email phishing and social engineering. You need cyber insurance if your company uses any digital tools or resources to conduct payrolls, connect with vendors, serve customers, run employee benefit programs, or gather sensitive user and customer data.
You need cyber insurance if your business:
- Accepts cards or other digital payment types
- Uses computers and mobile devices
- Stores medical or financial data
- Collects confidential customer information
What Does Cyber Insurance Cover?
Third-party liability coverage and first-party coverage are the two main categories of cyber insurance coverage. You have the option to purchase one or both types of insurance.
- First-party coverage safeguards your business in the event that you have to incur expenses following a data breach or a cyberattack.
- Third-party coverage shields you from lawsuits brought by clients, suppliers, partners, or other parties who accuse you of permitting a data breach to occur.
The types of incidents and damages covered by cyber liability insurance may be specified, for example, by terms like “ransomware insurance” or “data loss insurance.”
Remember that the products offered by the insurance industry’s cyber risk sector are always evolving. Some cyber insurance companies are significantly altering the depth and breadth of what they will and won’t offer to cover for organizations.
As of August 2021, AXA Insurance Company has announced that they will no more pay ransom demands for future policyholders. So you need to make sure you know what your Insurance will be paying for and what they will not be paying for anymore.
Cost Of Cyber Insurance
It will depend on the type of business you own and the kind of insurance you want.
The size of a company, the amount of liability coverage, the deductible choice, and security measures within a company all have a significant impact on premiums.
According to a study, a cyber liability limit of $500,000 with a $5,000 deductible would cost on average $1,146 per year, whereas a limit of $250,000 with a $2,500 deductible would cost on average $739 per year.
Where To Get It From?
Is Cyber Insurance Part Of Regular Business Insurance?
Cyber liability is typically not entirely covered under regular business coverage. In truth, it’s a prevalent misconception that regular policies include complete cyber protection. This is a problem since cyber liability is a growing issue that needs to be addressed in every risk management strategy.
Contrary to popular belief, most standard policies do not cover cybersecurity. Following a cyberattack or data breach, many businesses discover this the hard way. A classic example of this is the Sony PlayStation network breach in 2011. The breach cost the brand an estimated $171 million while affecting approximately 77 million customers. All the while Sony believed that its regular policy with Zurich American Insurance Company covered these damages. However, after the breach, they learned that the policy only covered physical property damage.