Studies show that 65% of companies were hacked in the last year, and the average cost of each cyber breach was $4 million. If you don’t have Cyber Risk Insurance, your business could be one of them! Cyber risk insurance covers the cost to recover from data breaches and other cyber events that are not the result of your negligence. This type of coverage is mandatory in certain industries, so it’s important to find out whether you need it before you get hacked! Here’s what you need to know about cyber risk insurance.
What Is Cyber Risk Insurance?
The term Cyber Risk Insurance is relatively new. However, according to a 2017 survey by Forbes Insights and Marsh, 72% of U.S. businesses feel they will likely experience a security breach in 2017. This underscores how increasingly important cyber risk insurance is becoming for organizations operating online or with digitized assets, as there are numerous types of insurance available to protect businesses from security events like these. For example, if your organization suffers a data breach due to an employee's negligence or if it experiences another type of malicious cybersecurity activity that results in your organization being unable to operate normally for some time due to theft, damage, etc. Cyber Risk Insurance may be able to help you recover financially.
It typically covers damages such as system downtime: If you're unable to access your systems due to malware/virus infections or because of server failures/data breaches Legal fees/defense costs: Any costs associated with defending against lawsuits brought on by customers whose personal information was compromised Lost business revenue during downtime Losses associated with identity theft. This means that you could potentially get compensated for all direct costs related to recovering from a security event.
What Is Cyber Protection Insurance?
Cyber protection insurance, sometimes called Cyber Risk Insurance, covers a company's financial losses as a result of ransomware and data breaches. This type of coverage is more comprehensive than traditional IT insurance also called property-casualty insurance, which often excludes cyber risks. When it comes to cybersecurity, there are two main types of coverage you should consider the third-party liability and data breach expense. The former protects your business if you're found liable for another company's financial damages due to an attack on your network; some policies also protect against civil penalties assessed by regulatory bodies like state attorneys general. The latter coverage reimburses expenses like customer notification costs and credit monitoring services that arise when your personal or business information is compromised in a cyber incident.
This type of coverage is sometimes called Cyber Insurance protection, cyber liability insurance, or cyber-specific coverage. It offers several levels of data breach and other related expenses, like notification costs and credit monitoring expenses. It's often recommended in conjunction with business interruption or other IT property-casualty policies to make sure you're covered in case your network is crippled by a virus or if ransomware encrypts critical files you need to run your business. Business interruption coverage is particularly important because it will pay for costs like temporary office space, outsourced IT help, and payroll services when you are unavailable due to an attack that disables your computers for some time.
How Does Cyber Insurance Work?
You should expect your insurance company to manage some of your Cyber Risk Insurance. Insurance policies vary by provider, but most insurance plans can be broken down into two parts a protection plan and a recovery plan. In other words, cyber insurance pays to defend against attacks, monitor potential threats, or hire consultants to make sure data is secure. If an attack occurs and depending on what’s covered in your policy, insurance may also help cover certain costs associated with fixing a security breach, such as sending out notifications to affected customers and hiring an IT consultant for recovery operations.
The protection part of your policy might also help you prepare for a security breach, like getting information on data breach notification laws and contracts with service providers. It will also cover things like any added hardware or software to keep your systems safe, plus costs for hiring outside contractors. In addition, Cyber Risk Insurance can help pay for legal services to deal with lawsuits that may arise from a security incident. Depending on your plan, these services may include things like public relations management and public relations event response e.g., crisis communications. These plans can also include coverage for costs associated with employee monitoring in case they have been attacked with ransomware or been infected by malware.
