What Is Cyber Insurance?
In today’s digital age, with technology ever evolving, businesses are facing an increasing number of cyber threats, from data breaches to ransomware attacks. The cost of these incidents can be significant, not only in terms of financial losses but also in reputational damage. This is where cyber insurance comes in!
Cyber insurance is a type of insurance policy that provides financial protection to businesses of all sizes in the event of a cyber attack or data breach. Cyber insurance is designed to help businesses mitigate the risks associated with cyber attacks and provide financial protection in the event of a cyber attack or breach. However, with so many different policies and providers out there, it can be very difficult to know where to start. Let’s explore the basics of cyber insurance and what businesses need to know to make an informed decision when it comes to protecting themselves from cyber threats.
Cyber risk insurance policies typically cover a range of costs associated with a cyber incident. These costs can include:
- Investigation expenses
- Legal fees
- Data recovery costs
- Notification costs to affected parties
- Business interruption losses and damages to a company’s reputation
Cyber insurance policies may vary in terms of the specific risks covered and the extent of coverage provided. It is important for businesses to carefully evaluate their cyber risks and choose a policy that provides adequate protection for their specific needs.
Who Needs Cyber Insurance?
Any business of any size that uses technology and stores sensitive information should consider having cyber insurance. Cyber attacks can affect businesses of all sizes, from small businesses to large corporations, and can occur in any industry. Certain industries though, such as healthcare, finance, and retail, are more at risk of cyber threats due to the sensitive nature of data handled within. Businesses handling personally identifiable information, credit card data, or any other sort of sensitive information are also at higher risk. Such businesses must prioritize having cyber insurance to protect against potential financial losses resulting from a cyber attack.
Some businesses are subject to regulatory requirements, specifically those in the healthcare industry. If this applies to your business, you may be required to have a cyber insurance policy as part of your compliance obligations.
Why Is Cyber Insurance Important?
With cyber threats becoming increasingly common and sophisticated, cyber insurance is more important than ever. Data breaches, theft of sensitive information, business interruptions, and reputational damage are all possible results of a cyber attack, including significant monetary damages. Cyber insurance provides financial protection and helps businesses recover from cyber attacks.
Cyber insurance not only serves as a protection, but also provides businesses with peace of mind knowing that they have a plan in place if there were to ever be a cyber attack or threat. Cyber threats will keep evolving, unfortunately, but that means it's so important for businesses to be proactive in an effort to protect themselves from malicious cyber risks.
What Is Covered Under a Cyber Insurance Policy?
The coverage provided by a cyber insurance policy can vary depending on the insurer and policy type. This is helpful to businesses with varying needs, but it can also seem daunting when trying to find a fitting policy for your business.
Cyber insurance policies typically provide coverage for the following:
- Data breaches: The costs associated with investigating a data breach, notifying affected parties, and providing credit monitoring services to affected individuals.
- Cyber extortion: The costs associated with dealing with ransomware attacks and cyber extortion threats.
- Business interruption: The costs associated with loss of income due to a cyber attack or network downtime.
- Data loss or damage: The costs associated with restoring or recreating lost or damaged data.
- Liability: The costs associated with defending against legal claims, such as lawsuits resulting from a data breach or violation of privacy.
- Cybercrime: The costs associated with cybercrime, such as funds transfer fraud or social engineering scams.
It is vital to review the terms and conditions of a cyber insurance policy carefully to understand what is covered and what is not. Some policies may have exclusions or limitations, such as exclusions for certain types of cyber attacks or limitations on the amount of coverage provided.
How Much Does Cyber Insurance Typically Cost?
The cost of cyber insurance can vary depending on several factors, including the size of the business, the industry, the level of risk, and the coverage limits. Generally speaking, the larger the business and the more sensitive data it handles, the higher the cost of a cyber insurance policy.
A small business may be able to purchase a basic cyber insurance policy for a few hundred dollars per year, while a large corporation may need to pay tens or hundreds of thousands of dollars per year for a more comprehensive coverage policy. It is all dependent upon the business’s characteristics and its needs.
The average cost of cyber insurance in the U.S. in 2021 was $1,589 per year or $132 per month. According to IBM, the average cost of a data breach was $4.35 million in 2022. These rates continue to rise!
It’s important to understand as a business owner though, that the cost of cyber insurance is just one factor to consider when evaluating whether to purchase a policy. The potential cost of a cyber attack, including the cost of investigating and responding to the attack, notifying customers, and defending against legal claims, can be far greater than the cost of a cyber insurance policy. Therefore, businesses should carefully consider the potential risks and costs associated with a cyber attack when deciding whether to purchase cyber insurance.
What Is Not Covered By Cyber Liability Insurance?
Cyber insurance policies can provide essential protection against a wide range of cyber threats, however, there are some exclusions and limitations to this coverage. Here are some examples of what may not be covered by a cyber liability insurance policy:
- Intentional acts: If a cyber attack was carried out intentionally by an employee or authorized individual, the resulting damages may not be covered by a cyber insurance policy.
- Prior acts: Some policies may only provide coverage for damages that occur after the policy is purchased, and may not cover damages resulting from prior events or known issues.
- Physical damage: Most cyber insurance policies will only cover intangible losses, such as data loss or theft, and may not cover physical damage to equipment or property resulting from a cyber attack.
- Contractual liability: Some policies may exclude coverage for liabilities that the insured has assumed under a contract or agreement.
In addition to a cyber insurance policy, businesses may want to consider purchasing additional insurance policies that will provide supplementary protection against other types of risks.
Let us help you protect your business with cyber insuranace and keep your mind at ease. At Tivly, our goal is to help you find protection for your business as efficiently as possibly by matching you with the right insurance provider. Simply give us a call at 877-907-5267 or complete the form above and one of our specialists will contact you right away.
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