Cyber insurance serves as vital protection for any company collecting data. In this post, we’ll take you through a cyber insurance overview.
Cyber liability insurance protects your business against potential lawsuits after data breaches.
This makes it essential for all firms, ranging from multinational corporations to the local corner store.
Below, we look at everything you need to know about cyber insurance. We'll go through what it is and what it covers while answering some frequently asked questions.
In a nutshell, cyber insurance coverage is a policy that protects your business in the event of a data breach, network failure, or employee error.
For example, let’s say your financial company falls victim to a black hat hacker. Your cyber insurance carrier will notify clients about the breach, restore personal identities, recover lost data, and fix damaged computer software and systems.
This keeps your workload and stress levels to a minimum, allowing you to get up and running as soon as possible.
If your company is collecting customer data, you need cyber insurance since it protects your business if black-hat hackers manage to access this data.
It’s even more complex if you're offering B2B services. You're collecting data from companies that are also receiving data from their customers. So if anything happens to the data you've gathered, hackers can use data from your client's customers.
On top of any fines and penalties, cyber insurance covers:
Cyber insurance policies cover forensic investigations, which aim to find data breaches and the vulnerabilities that come along with them. This allows your company to locate and remove any security weaknesses exploited during a breach.
Your insurance also covers incident response assistance. This occurs before an investigation and helps close the window of opportunity for black-hat hackers to work with.
Litigation expenses are any costs that are connected to defending your firm in court. Common types of litigation expenses include:
These fees can stack up quickly and require a significant amount of cash if you don't have cyber insurance.
So instead of stressing about how your business will pay for court fees, you can focus on bouncing back and regaining customer trust.
If courts find that your business is at fault because it didn't follow government regulations, you can expect hefty fines.
For example, healthcare firms abide by HIPAA requirements, while financial institutions follow GLBA regulations.
Breach of data privacy laws has set firms back millions or even billions of dollars. So it's essential for your business’s survival to have the proper protection.
In the wake of data breaches, your team is already stressed. The last thing you want to worry about is having enough money for crisis management. The cost can be surprisingly high, especially if you're part of a high-profile company.
Luckily, insurance pays for crisis management expenses like dealing with the media and public relations.
Chances are you'll have to put all business processes on pause while investigating and strengthening data security after a breach. You'll also have to contact customers and inform them about what's happening.
This is expensive because you still have business expenses like salaries and rent, but your income dries up.
Fortunately, cyber insurance policies reimburse you for income loss. So you're still bringing in a similar amount of revenue, allowing you to pay rent and employee salaries.
Cyber extortion coverage is an agreement within most insurance policies that protects your business and customer data against extortion or blackmail.
For example, let's say a company executive receives an email threatening that an extortionist will release a virus into the company website if they don't pay a set amount of money within 24 hours.
The company will have to dig into its cash reserves to fulfill the extortionist's request. They'll also have to hire technical professionals to help track the hacker and ensure it doesn't happen again.
However, cyber insurance policies will pay the total amount for you and cover the costs of fixing the weakness within the firewall.
Betterment is an essential part of cyber security because it locates security issues and focuses on improving them.
But upgrading cyber security is expensive. You'll have to hire a cyber security engineer to fix problems while using white-hat hackers to find areas that black-hat hackers might try to exploit.
This is where cyber insurance helps. Cyber insurance carriers negotiate with cyber security professionals and cover the entire cost of betterment.
Here's a cyber insurance coverage checklist to help you meet coverage requirements:
Read More: Cybersecurity Statistics
Most cyber insurance policies won't cover:
Property damage: Although many carriers allow you to add property damage to a policy, they usually don't cover it. This would be a problem if a hacker damaged your hardware or software to the point where it's unusable.
Now, let’s have a look at some standout coverage spotlights.
Reputational harm coverage goes further than crisis management. Where crisis management involves dealing with the press directly after a data leak, reputational harm coverage is a long-term plan to restore your credibility among customers.
Information privacy coverage is another must because it protects you from liability after employees' data leaks.
For example, imagine you're a restaurant owner and have been gathering employee information for years. One night, somebody steals your laptop and gains access to sensitive data. Your employees can sue for data negligence. But with information privacy coverage, your insurance provider takes care of everything.
Social engineering coverage is also helpful because it covers you if a criminal tries to trick someone in your company into giving away information.
Here’s at look at three of the best cyber insurance carriers in 2022.
Worth Insurance is a great choice of cyber insurance carrier because we work alongside companies like:
With Worth Insurance, you're partnering with a reliable carrier that you can contact any time of the day. If something unexpected happens like a data breach, our team will guide you through the entire process.
Also, you won't have to worry about reputational damage or business interruption since Worth Insurance covers your insurance needs.
AXA XL is another suitable cyber insurance carrier for businesses because they offer a full suite of solutions to protect you during breaches. The best part is that they also provide E&O insurance, which bulletproofs your business against client losses.
Chubb is a worldwide insurance carrier well-known for its business interruption loss coverage. You won’t have to worry about paying bills while recovering from data hacks. The 24-hour customer support also ensures that investigators are scrambled immediately to locate hackers and close the window of opportunity.
Cyber insurance costs between $300 to $5,000 per year. But this depends on your industry, company size, and type of clients you cater to.
For example, if you're a large advertising firm that works with Fortune 500 companies, you can expect to pay a higher price. However, if you run a small corner store that collects email addresses, you'll pay around $300 or even less.
Wonga Loans: In 2017, a Wonga Loans data breach leaked the bank account details of over 250,000 customers. Reports say that the breach happened because Wonga Loans wasn’t staying up to date on new privacy regulations.
Morrison's Supermarkets: The Morrison chain fell victim to a data breach when an employee intentionally leaked the private information of everyone working at the company. This included bank information and physical addresses. Fortunately, the forensic investigation found the culprit, and he was sentenced to eight years in prison.
Brighton and Sussex University Hospital: The government fined Brighton and Sussex University Hospital £325,000 after someone accessed sensitive employee data and put it on eBay for sale.
Although cyber and tech E&O insurance seem similar, a few key differences exist.
The main difference is that cyber insurance is first-party liability insurance. This means it helps your company address the financial aftermath of data breaches.
E&O insurance protects you if you make a mistake that harms your client financially. This could be settlement costs, court fees, and lawyer fees.
Recovering from a cyber attack is stressful since you'll have to regain customer trust so they have peace of mind knowing breaches won't happen again.
Any business collecting data from customers must have cyber insurance, regardless of their industry.
But cyber security is crucial for businesses in the technology and finance fields because they usually cater to high-net-worth individuals. This means data breaches can potentially cost more money.
Cyber insurance is necessary because if data leaks into the wrong hands, your company can be held accountable for millions. Cyber insurance costs a few hundred or thousand dollars per month, depending on your business size. So it’s worth it if you compare that to potential millions in losses.
Companies need cyber insurance because it protects them against liability when data breaches occur. The insurance carrier takes care of everything instead of using company cash reserves.
This greatly reduces the stress of data breaches. It gives you peace of mind knowing if black-hat hackers get their hands on client data, your company isn’t responsible.
Cyber insurance won't cover costs for improving internal technology systems and the loss of value caused by hackers accessing intellectual property.
Although insurance covers short-term betterment, you'll have to invest your time and resources into developing your long-term security systems.
Cyber insurance is a must for every business, especially those collecting terabytes of customer data. This is because clients can hold your company liable for any data breaches.
Fortunately, cyber insurance is an effective tool that protects your firm against data breaches.
So if you're looking for peace of mind knowing you aren't responsible for data breaches, request a Worth Insurance quote. Worth Insurance protects your business from customer losses, so data breaches aren't that stressful.