Cyber insurance can help your company mitigate the adverse effects resulting from cybersecurity incidents. In this post, we’ll discuss what cyber insurance is, what it covers, and why your business needs it.
Cyber insurance is a type of insurance that’s designed to protect against cyber risks. It’s primarily for mitigating the adverse effects brought by cybersecurity incidents (like a data breach, ID theft, or a cyberattack). It also covers the cost of recovery from such events and helps an organization cope with lawsuits. Cyber insurance is also referred to as cybersecurity insurance, cyber risk insurance, data breach insurance, and cyber liability insurance.
According to PwC, cyber insurance premiums were forecasted to grow from $2.5 billion in 2014 to $7.5 billion in 2020. In the US alone, a third of companies have some form of cyber insurance. These figures indicate that companies are finally appreciating the importance of cyber insurance.
Cyber insurance has no standard coverage, as it’s relatively new and still evolving. It differs from general liability insurance, which only covers property damage and bodily injuries.
Policies differ from one insurance company to another, but generally, there are 2 types of cyber insurance coverages:
Before buying a cyber insurance policy, be aware not only of the coverages but also the things that are not included. Here are the typical exclusions:
Companies that store customer information, perform online payments, or use cloud services should buy cyber insurance. But most (if not all) companies now have an online presence and are regularly exposed to cyber threats. If your company is a small one, do not assume that you don’t need cyber insurance.
Cyber insurance won’t shield a company from cyberattacks or from being exposed to cyber risks, but it can mitigate the damages caused by a cybersecurity incident. Cyber insurance is an important safety net to ensure that your business can continue to thrive with minimal impact after a security incident.
Cyber insurance is becoming a vital part of cybersecurity strategies for organizations. Noncompliance with required frameworks and regulations like PCI DSS and HIPAA may result in costly penalties and fines. Depending on your cyber insurance, noncompliance fines may be covered.
While cyber insurance is helpful, it doesn’t exempt a company from fulfilling cybersecurity obligations. Whenever a company buys cyber insurance, it agrees to establish measures to avoid incidents that can be prevented in the first place. If there are no such measures, there’s a chance that the company’s claims may be denied. Companies should take proactive steps to maintain a strong cybersecurity posture, such as conducting regular compliance audits and implementing employee cybersecurity awareness training.
Cyber insurance is a valuable protection for businesses of all sizes, offering coverage that protects your business from many of the devastating effects of a security breach. With the cost of a data breach skyrocketing and fines for regulatory non-compliance on the rise, cyber insurance can help your business weather the storm.