All businesses with access to the internet and personal data need cyber security insurance for business protection as they are susceptible to cyber threats and attacks. Cybercriminals are becoming more sophisticated in their attacks and can easily evade traditional security controls. Businesses need to adopt newer technology and should consider investing in cybersecurity insurance as a breach response mechanism.
WHAT IS CYBERSECURITY INSURANCE?
Cyber security insurance, also known as cyber liability insurance, is coverage that protects your business from losses due to cyber threats. This includes malicious activities such as data breaches, cyber hacks, malware, phishing, and any other cyber risk.
This type of insurance prevents your business from going into financial loss by offsetting the costs incurred after a breach. The costs may be first-party (incurred by the company) or third party(customer) related.
First-Party Related Costs
Investigation costs
Charges for risk assessment for future cyber threats
Replacing damaged computer systems
Ransomware payments
Loss of revenue due to disruption in operations
A cyber attack on your business affects your customers and business partners. They can sue the company due to damages suffered from acts like sharing their private customer data. Your cybersecurity insurance will cater for third-party costs.
Third Party Costs
Customer notification, when a customer data breach occurs
Settlements for damages caused
Attorney and court fees
WHICH BUSINESSES NEED CYBERSECURITY INSURANCE?
All businesses that have access to the internet face a cyber risk. However, some have a greater risk due to the nature of the information they handle.
BUSINESSES THAT HANDLE CONFIDENTIAL CUSTOMER DATA SUCH AS CUSTOMER NAMES, ADDRESSES, MEDICAL RECORDS, AND SOCIAL SECURITY NUMBERS NEED CYBERSECURITY INSURANCE COVERAGE.
If your business deals with a large customer base and has valuable data assets, there’s a lot at stake in a ransomware attack. Cybersecurity insurance will keep your business afloat in such times and assist in financial loss due to downtime.
WHY DOES YOUR BUSINESS NEED CYBERSECURITY INSURANCE?
The sixth director of the FBI, Robert Mueller, explained that there are two types of companies: those that have undergone hacking and those that will. Laws also make it easier for customers to take organizations to court over compromised personal data.
CLOSING THE GAP IN INSURANCE NEEDS
Most traditional commercial property insurance policies do not cover cyber risks. In 2011, Sony’s PlayStation Network experienced a cyber attack, where hackers leaked personally identifiable information (PII) of 77 million PlayStation users. The type of insurance policy that Sony had only covered physical damage, and Sony had to foot the total costs of damages in their breach response.
Your business is likely to suffer significant financial loss in the occurrence of a cyber attack. Most commercial property insurance policies limit their coverage by using the tangible property clause. This limits the insurance carrier to insure physical assets only, such as the server where the data is stored and not the data itself.
Cybersecurity insurance closes that gap by offering the financial support your business needs during a data breach response.
OFFSETTING EXPENSES
It is challenging to budget for cyber threats and the associated financial loss due to the unpredictable nature of such attacks. The U.S records some of the highest costs of data breach incidents worldwide. A report by IBM shows that the average cost of a data breach is over $4 million.
In the face of the digital disruption age, where data breach regulations are getting stricter, this cost will likely go up. Cybersecurity insurance policies offer you options, depending on the price, that covers the extra expenditure associated with a cyber risk.
With this type of insurance, your business can afford to hire a cyber forensic investigator to establish the cause of the breach, vulnerabilities in your system, and collect criminal reports where needed. Cyber security insurance also covers identity protection for customers affected by the customer data breach.
PROVIDING RESOURCES FOR DATA BREACH RESPONSE
The breach response process often requires input from professionals outside your business, such as attorneys and a breach coach. They will guide you through the breach response, and limit the legal and cost implications. Insurers who offer cybersecurity insurance are better at providing referrals to the numerous service providers that your business needs.
They can also negotiate discounted rates to reduce the service charge rates. Using approved vendors at such a time increases your chances of success, and saves you the headache of shopping for multiple service providers.
Cybersecurity insurance gives your business the security to operate in the digital age. As this is a relatively new policy, the coverage may vary depending on the provider and cyber risk. Thus, it is necessary to conduct an in-depth review to ensure the cover you choose has the essential protections and provisions for your business.
WHAT IS CYBERSECURITY INSURANCE?
Cyber security insurance, also known as cyber liability insurance, is coverage that protects your business from losses due to cyber threats. This includes malicious activities such as data breaches, cyber hacks, malware, phishing, and any other cyber risk.
This type of insurance prevents your business from going into financial loss by offsetting the costs incurred after a breach. The costs may be first-party (incurred by the company) or third party(customer) related.
First-Party Related Costs
Investigation costs
Charges for risk assessment for future cyber threats
Replacing damaged computer systems
Ransomware payments
Loss of revenue due to disruption in operations
A cyber attack on your business affects your customers and business partners. They can sue the company due to damages suffered from acts like sharing their private customer data. Your cybersecurity insurance will cater for third-party costs.
Third Party Costs
Customer notification, when a customer data breach occurs
Settlements for damages caused
Attorney and court fees
WHICH BUSINESSES NEED CYBERSECURITY INSURANCE?
All businesses that have access to the internet face a cyber risk. However, some have a greater risk due to the nature of the information they handle.
BUSINESSES THAT HANDLE CONFIDENTIAL CUSTOMER DATA SUCH AS CUSTOMER NAMES, ADDRESSES, MEDICAL RECORDS, AND SOCIAL SECURITY NUMBERS NEED CYBERSECURITY INSURANCE COVERAGE.
If your business deals with a large customer base and has valuable data assets, there’s a lot at stake in a ransomware attack. Cybersecurity insurance will keep your business afloat in such times and assist in financial loss due to downtime.
WHY DOES YOUR BUSINESS NEED CYBERSECURITY INSURANCE?
The sixth director of the FBI, Robert Mueller, explained that there are two types of companies: those that have undergone hacking and those that will. Laws also make it easier for customers to take organizations to court over compromised personal data.
CLOSING THE GAP IN INSURANCE NEEDS
Most traditional commercial property insurance policies do not cover cyber risks. In 2011, Sony’s PlayStation Network experienced a cyber attack, where hackers leaked personally identifiable information (PII) of 77 million PlayStation users. The type of insurance policy that Sony had only covered physical damage, and Sony had to foot the total costs of damages in their breach response.
Your business is likely to suffer significant financial loss in the occurrence of a cyber attack. Most commercial property insurance policies limit their coverage by using the tangible property clause. This limits the insurance carrier to insure physical assets only, such as the server where the data is stored and not the data itself.
Cybersecurity insurance closes that gap by offering the financial support your business needs during a data breach response.
OFFSETTING EXPENSES
It is challenging to budget for cyber threats and the associated financial loss due to the unpredictable nature of such attacks. The U.S records some of the highest costs of data breach incidents worldwide. A report by IBM shows that the average cost of a data breach is over $4 million.
In the face of the digital disruption age, where data breach regulations are getting stricter, this cost will likely go up. Cybersecurity insurance policies offer you options, depending on the price, that covers the extra expenditure associated with a cyber risk.
With this type of insurance, your business can afford to hire a cyber forensic investigator to establish the cause of the breach, vulnerabilities in your system, and collect criminal reports where needed. Cyber security insurance also covers identity protection for customers affected by the customer data breach.
PROVIDING RESOURCES FOR DATA BREACH RESPONSE
The breach response process often requires input from professionals outside your business, such as attorneys and a breach coach. They will guide you through the breach response, and limit the legal and cost implications. Insurers who offer cybersecurity insurance are better at providing referrals to the numerous service providers that your business needs.
They can also negotiate discounted rates to reduce the service charge rates. Using approved vendors at such a time increases your chances of success, and saves you the headache of shopping for multiple service providers.
Cybersecurity insurance gives your business the security to operate in the digital age. As this is a relatively new policy, the coverage may vary depending on the provider and cyber risk. Thus, it is necessary to conduct an in-depth review to ensure the cover you choose has the essential protections and provisions for your business.
Do Businesses Need Cyber Security Insurance?
Esther Kamau
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