What Is Cyber Insurance And Why Do You Need It?
What Is Cyber Insurance And Why Do You Need It? – Cyber insurance is a protection for companies against the significant losses that can come from a security breach or data hack. With this first-party coverage, the company receives financial assistance with the expenses that may be incurred when a cyberattack takes place.
Cyber-insurance is a specialty insurance product intended to protect businesses from Internet-based risks, and more generally from risks relating to information technology infrastructure and activities.
Types Of Cyber Insurance
There are two major types of cyber insurance;
- First-party coverage protects your company when you incur expenses from a data breach or when your company is hacked.
- Third-party coverage provides protection when a customer, vendor, partner, or other party sues you for allowing a data breach to occur.
You may choose to purchase either or both types of coverage. Cyber liability coverage may spell out the types of incidents and damages they will pay for, such as “ransomware insurance” or “data loss insurance.”
What Are The Four Categories Of Cyber Insurance?
- Network security and privacy liability.
- Network business interruption.
- Media liability.
- Errors and omission.
What Is Cyber Insurance Claim?
- DDos Attack
- Unauthorised Access
- Malware and Viruses
- Data Breaches
- Human Error
- Rogue employees
- Misleading communications
What Does Cyber Insurance Cover?
If you suffer an attack, it’s likely you and your business will incur your own costs as a result of the event. For example, costs to obtain advice and support; costs to identify the source and scope of the attack; restore your systems; recover your data and notify victims of privacy breaches. All of these are known as ‘first party losses’, and include costs to get your business back up and running.
Remember though, not all costs are covered under cyber insurance; for example, salary costs for employees, damage to property other than computer hardware, internet or utility outages .and uninsurable fines. As well if the third parties your involved with get affected by this (your customers) Cyber Insurance can help to cover your liability for these costs as well. This is called ‘third party liability
Related: Impact Of Technology On Insurance Industry
Who Needs Cyber Insurance?
Cybercrime is an increasingly serious problem, and to address it, strong cybersecurity is critical. Below are people that are all at risk of cyberattacks and data breaches.
- For-Profit Companies
- Not-For-Profit Organizations
- Educational Institutions
Cyber Insurance Benefits
Coverage for Data Breaches
Data breach insurance can help companies cover the costs associated with a data breach. These can include the costs for notifying affected parties, paying required fines, and restoring the system. Policies may include (or offer optional coverage) to pay for ransomware demands and lost business income due to the breach
Reimbursement for Business Loss
In addition to compromising sensitive information, cyber attacks often interrupt business and cause lost revenue. An effective cyber insurance policy will insulate a company from these costs and provide reimbursement for any income that was lost due to a cyber attack. This is particularly beneficial given the fact that a cyber attack, on average, will cost a company over $1 million.
Defense Against Cyber Extortion
Implement strong security measures: To reduce the risk of falling victim to cyber extortion, it is important for an organization to implement strong security measures such as using strong passwords, keeping software and security systems up to date, and using firewalls and other security technologies.
Other benefits include;
- Protect networks and data from unauthorized access.
- Improved information security and business continuity management.
- Improved stakeholder confidence in your information security arrangements.
- Improved company credentials with the correct security controls in place.