Cyber insurance

In a world of hackers, scammers and phishers, cyber insurance is a must-have for almost any business. But particularly for businesses that handle sensitive customer info, like credit cards, social security numbers and the like.

In a nutshell, cyber insurance, also called cyber security insurance or cyber liability insurance, is designed to protect businesses against things like data breaches, hacking and ransomware. It also steps in to help if a business is sued as a result of a security breach.

Did you know?

According to Cybersecurity Ventures, global cybercrime costs are expected "to grow by 15 percent per year over the next five years, reaching $10.5 trillion USD annually by 2025."

What's covered by cyber insurance?

As the name implies, cyber insurance protects businesses from a wide range of "digital disasters." A policy generally includes first-party coverage and third-party coverage. 

First-party coverage protects against things like:

  • Data breaches

  • Network failures

  • Malicious attacks 

  • Ransomware extortion payments

  • Network outages 

  • Lost revenue due to a security incident

Third-party coverage, sometimes called cyber liability insurance, steps in if a business is sued following a cyber attack or data breach. It covers things like:

  • Legal fees

  • Settlement fees

  • Compliance-related fines

Cyber insurance can also help pay for ongoing recovery services following an incident. For example, data and identity recovery for customers and reputation recovery for the business itself.

How does cyber insurance work?

Say an employee at a small tax firm fell victim to a phishing scheme and downloaded malicious malware onto the company's network. This caused significant data loss and customers sued the business after finding out their files had been hacked. 

Cyber insurance would help pay for data recovery as well as for updated security measures to be put into place. It would also help pay for the legal and court fees involved with the lawsuit.

What are the limits on cyber insurance?

Because cyber security breaches can range greatly in size and scope, so do the limits on this product – typically from $500,000 to $5 million per occurrence. 

But, of course, the risks and potential financial impacts will depend a lot on the size and nature of the business. According to Norton, the average cost of a ransomware attack is $1.85 million. But that's not to say that all businesses should carry $2 million in cyber insurance. Only that it's important to assess needs carefully when choosing coverage limits.

Who needs cyber insurance?

Of course, almost all large businesses should carry cyber insurance. But small businesses should not overlook this critical coverage either. 

According to Business News Daily, "43% of data breaches involve small business victims." And a recent report by IBM and the Ponemon Institute noted that the "average data breach cost for businesses with fewer than 500 employees is $2.98 million."

So really, ALL businesses should at least consider having cyber security insurance. But most particularly, businesses that do any of the following:

  • Store customer data online (phone numbers, credit cards, social security numbers, etc)

  • Have many customers to notify and help recover following a data breach

  • Have high revenue and more digital value to protect

With more and more businesses operating online and cybercrime on the rise, cyber insurance is quickly becoming necessary as an integral part of any business plan.

Let us help you protect customers with cyber insurance.

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