Do you know, research by Deep Instinct has noted that malware threats increased by 358% and Ransome threats by 435% in 2020, as compared to 2019? Isn’t this an enormous rise? And this is how safe a business is from cyber-attacks these days! But relax! Cyber security insurance to the rescue! But what does this mean to me? Well, data is everything in today’s world. Data is money and reputation. And cyber-attacks can lead to compromised data, both yours and your customers. This breach of sensitive information can land you in a suit which is where cyber-security insurance kicks in. It covers your legal costs if there be any lawsuit.
Without insurance, you can easily imagine how financially and emotionally draining such attacks could be!
Why is Cyber Insurance Important? Benefits of Cyber Security!
#1. It Gives You Online Security; The Obvious.
Cyber security insurance offers you reimbursement for the legal costs arising from a data breach.
Ransomware, malware, or stealing online information for fraud are becoming commonplace these days. And your company might end up facing a lawsuit from customers whose data got breached!
For example, you are an ecommerce store that holds sensitive records of people’s credit cards. But if their information gets compromised in a cyberattack, you can face a hefty lawsuit!
#2. Advancement in Technology Demands More Risk Coverage.
The pandemic led to many companies shifting their business online. But this shift happened so suddenly that companies did not have enough time to perform security audits for their online resources.
But with so much online data, the threat has increased manifold! The possibility of cyberattacks now is more than ever!
Who Needs Cyber Insurance?
Pretty much everybody with an online business must possess this policy. But here are a handful of examples to get the hang of it.
#1: E-commerce Businesses
From people’s private information like likes-dislikes to their credit card details, e-commerce websites have it all! A cyber-attack not only poses a massive threat to their financial standing but can also put a question mark on their credibility and reputation!
#2: Finance Companies
With numerous wallets and payment options available these days, financial companies carry the highest risk from cyberattacks. There are data breaches, online frauds, and whatnot! And since a finance company thrives on people’s trust, cyber-security insurance is a must-have for them!
#3: Digital Marketing Companies
These companies have customer contact data, sales records, etc., of each of their clients. A data breach can hurt their business in both financial and reputational terms.
#4: Tech Companies
If you own a tech company, you will undoubtedly remember the famous Sony cyberattack of 2014. They did not have cyber insurance and ended up paying millions for compromising the social security numbers of 47,000 people!
What Does Cyber Security Insurance Cover?
#1: First-Party Liability
Cybersecurity insurance covers the cost of any fraudulent misuse of information from your website, which includes:
- Transferred funds or property of a company by misusing information availed from online sources.
- Transfer of funds by a customer after a miscommunication. The customer might think that he spoke and gave information to your company’s employee. When in reality, it was a fraudster! The customer might sue your company in such instances!
- Extortion payments in case of a ransomware attack!
- Losses during an interruption in business or a sudden halt in your online business due to some cyberattack. Your website might go down for a few days, causing you financial losses of thousands of dollars!
- Crisis expenses arising out of hiring a cybersecurity expert for recovering breached data.
- It even covers email phishing scams!
#2: Third-Party Liability
Below are a few instances where the other party gets paid from your insurance provider!
- Cost of repairing or replacing a system due to security failures.
- It covers your liability to pay for any leakage of the client’s private information on the web space.
- Payment for any copyright infringement due to leakage of client’s data.
- Any other payments for reputation loss, libel, or slander.
- Cost of defending any suits brought by customers or the government on your company.
What Does Cyber Security Insurance Not Cover?
- It does not cover the cost of a system failure due to a human error. However, it can include careless handling of information on the internet by your employees.
- Incidents that occurred before your cyber insurance was in place.
- It does not cover a fallout that occurred due to a loophole that the insurance company notified you about, but you did not take steps to protect it.
- The cost to improve your technology to prevent a cyberattack.
Where Can You Buy a Cyber Security Insurance?
Since cybersecurity insurance is a new market, the coverage varies. Different providers will offer you a different range of coverage. Generally, companies that provide errors and omissions (E&O) insurance also provide cybersecurity insurance. Do search for your insurance policy online and make an informed decision!
In A Nutshell…
Like, spiderman says, with great power comes great responsibility! Similarly, companies with sensitive customer information are responsible for keeping it safe! The digital landscape is changing every day. Although cyber insurance is at its nascent stage of development, it offers enormous value in terms of risk management!
Paying a small premium every month is better than spending millions in a lawsuit while damaging your reputation along the way!
I am wrapping up my discussion with an opinion-worthy quote.
” At the end of the day, the goals are simple: safety and security.” ~Jodi Rell
If you have any questions or suggestions, please drop them in the comment box! Also, let me know if you have cybersecurity insurance and what challenges you faced while buying it! Let’s discuss! I am all ears!