Detailed Guide: Basics of Cybersecurity Insurance
Cybercriminals and malicious hackers are a massive headache for organizations and individuals alike. Cyberattacks are on the rise, with threats becoming more and more sophisticated due to the emergence of technologies like AI and Machine learning.
In addition, hacker groups are cooperating more, making the cases of harmful cyber-attacks more prevalent. Furthermore, hacking attacks usually threaten a business’s livelihood, and recovering from an attack may cost an organization a fortune. Consequently, more people and organizations are opting for cyber insurance to mitigate the effects of a cybersecurity incident.
- What Exactly Is Cyber Insurance?
Cyber insurance (Also known as cyber liability insurance or cyber risk insurance) refers to an insurance policy that aims to protect organizations and individuals from the effects of cyberattacks and hacking threats. Cyber-attacks that could be anything from malware attacks to ransomware attacks can cause untold financial impact to a business.
Breaching an organization’s network requires lots of time and money to secure sensitive data and regain customer confidence—a cyber insurance policy cushions businesses by reducing disruptions in a cyberattack incident. The policy shoulders some of the financial costs of dealing and recovering from a cyberattack, allowing companies to resume operations with minimal disruptions to the bottom line. Let’s cover the basics of Cybersecurity insurance.
- Who Needs Cyber Insurance?
The short and most accurate answer to this question is everyone. All businesses must invest in cyber insurance. As they say, cyber-attacks are not a matter of “if” but “when?” Cybercriminals are always indiscriminately on the lookout for vulnerabilities they can exploit in websites to steal essential data.
Most small businesses think that they are not in harm’s way and they, therefore, do not need cyber insurance. Wrong! Hacking is not a reserve for the big guns. Small businesses are also a ripe target for cyber-attacks. Even more so because many small businesses do not have cybersecurity strategies in place, which makes them low-hanging fruits for malicious cybercriminals and hacking threats.
With cyberattacks costing companies thousands of dollars, all businesses must follow the best practices to keep the bad guys away. Some of the best approaches to avoid attacks are installing firewalls, using strong passwords, and ensuring that any communication within the network is encrypted. To encrypt the in-transit communication between the web browser and the client-server, you need to install the right SSL certificate.
An encrypted connection can be achieved using a premium yet cheap positive SSL wildcard certificate, which provides industry standards encryption cheaply. With this single SSL certificate installed on your website, you can secure multiple first-level subdomains under the chosen primary domain.
- Prevention is better than cure.
However, there are times when the prevention measures are still not enough. In the event of an attack, a cyber insurance policy ensures that businesses remain nearly unscathed and can resume operations quicker.
- What Does Cyber Insurance Cover?
The extent to which a cyber insurance policy covers depends primarily on the insurance provider and the choice of cover that you select. However, similar to other insurance covers, cyber insurance covers a standard set of incidences. Here are some of the things that cyber insurance covers:
Malware attacks that make it nearly impossible to connect to networks
Network security liabilities:
These cover a company’s liability to a third party if viruses are transmitted to their machines. It also covers data breaches and DDoS attacks that cause problems on the network.
Data privacy liability:
This refers to a company’s liability to third parties in case of unauthorized exposure of confidential information. The cover also shoulders defenses against regulatory actions.
Malicious hackers make extortion demands with possession of sensitive information that they are threatening to expose.
Any liabilities resulting from contractual obligations.
Lost profits and extra expenses incurred during a cyber incident from malicious hackers or by accidental human error.
Expenses from class-action lawsuits and other costs incurred in paying settlements.
Losses incurring from social engineering targeted on employees.
Any losses incurred by the business because of reputational damage after a publicized cyberattack.
Fines and other legal expenses due to regulatory investigations.
Data asset protection. It involves covering costs incurred in replacing and restoring destroyed or corrupted data.
- What Does Cyber Insurance Not Cover?
Some of the scenarios that most insurers do not cover are:
Where physical property is destroyed even if the destroyed devices have sensitive information
The loss of future potential profits due to a cyberattack.
The loss of a company’s value due to theft of intellectual property by an act of cyberattack.
The cost of bettering or upgrading the company’s systems and technology after a cyber incident.
- How Much Does Cyber Insurance Cover Cost?
The insurance premiums of one business will differ significantly from that of another business. This is because various factors will affect the costs of cybersecurity insurance for a business. Some of those factors are:
The type of confidential data a company stores.
The claim history.
The amount of coverage a business needs.
The size of the company and the number of customers.
- Does Cyber Insurance Have a Deductible?
Similar to most other coverages, cyber insurance has a deductible. A deductible is a fixed amount of money that the insured must pay before the coverage starts paying. It is mainly applied any time the insurance policy covers a loss. Therefore, a lower deductible translates to higher premiums and vice versa.
Elements To Consider When Selecting a Liability Policy for Your Business
Before selecting a cyber insurer, you need to ask:
Does it cover forensic expenses?
Does it cover legal costs?
Does it cover public relations expenses?
Does it cover notification expenses?
Does it cover regulatory penalties and fines?
The Best Cybersecurity Insurance Providers
The best cybersecurity insurer is one that meets the unique needs of the insured company. With that being said, there are some renowned insurance groups like CoverWallet, Hiscox, AIG, Chubb INA groups, etc.
While cyber insurance offers peace of mind and helps mitigate the effects of a cyber-attack, it should not replace cybersecurity. Cyber insurance is not the technical solution for dealing with hackers and malicious cybercriminals. It only acts as a support in the event of an attack. That means that it is still vital for companies to have comprehensive tools like antiviruses, encryption software, and two-factor authentication to protect their systems from unwanted attacks.