In 2024, businesses are expected to lose $452 billion due to cybersecurity attacks. One effective way to prevent a financial loss for your business is to get cyber security insurance. Cyber security insurance, or cyber liability insurance, covers financial losses from incidents like data breaches and hacks. Insurers offer policies with varying coverage but typically include first-party coverage, which pays for company expenses related to a security breach, and third-party scope, which covers damages or settlements resulting from suits or claims due to your business actions or inactions.
What Does Cybersecurity Insurance Cover?
You can hire experts to assess your business to check if you need a cyber insurance policy, which usually covers:
- Privacy Liability
Privacy liability coverage is crucial for organizations that handle sensitive employee and customer information. It protects you against liabilities from cypher incidents or privacy law violations related to private data, covering costs like consumer class-action litigation, settlement funding, and regulatory investigation expenses.
- Network Security Coverage
This is your insurance if your organization faces network security failures, which can include cyber extortion demand, data breaches, malware infection, business email compromise events, and ransomware attacks. It covers IT forensics, legal expenses, data restoration, ransomware negotiation and payment, breach notification, public relations, and identity restoration.
- Business Network Interruption
If your business favors operational cyber risks, then consider getting this coverage. NBIC includes losses from system failures due to human error, failed software patches, or third-party hacks. It can help you recover the costs incurred and profits lost during the network outage.
- Omissions and Error
This protects you from cyber attacks that slow down customer service delivery or prevent fulfilling your contractual obligations. It covers claims related to errors or performance failures in services, defending against allegations of negligence or breaches of contract, and covering legal defense costs.
- Media Liability
This protects against intellectual property infringement, excluding patent infringement, in printed and online advertising, including social media posts.
What Cyber Insurance Doesn’t Cover
Cyber liability insurance typically does not cover issues caused by human error, negligence, or preventable actions. Common exclusions include:
- Poor security processes: These attacks happen due to improper security or inadequate configuration management.
- Previous breaches: Security breaches or events before you purchase a cybersecurity insurance policy are not covered.
- Human error: Any cyber attacks made due to any fault of your company personnel are excluded.
- Insider attacks: Data theft or loss caused by an insider attack, such as by your employee, is not covered.
- Any previous vulnerabilities: This includes breaches that occurred because your business failed to address a known vulnerability.
- Technological system improvement: It doesn’t cover costs related to technology improvements, such as strengthening applications and networks.
Benefits of Cybersecurity Insurance
Cybersecurity insurance comes with multiple benefits to help you protect your business.
- Protection Against Cyber Risks and Financial Protection
One of the most essential benefits of cyber liability coverage is protecting your business against cyber events, including terrorism-related events. It provides network security coverage and aids in the prompt remediation of cyber attacks and incidents.
Cyber insurance offers financial security against damages caused by cyber incidents. From covering expenses for investigations, credit monitoring services, and potential legal liabilities to other costs associated with data breaches, it helps you save money for the future. It also compensates for business interruptions, revenue loss, and computer system restoration.
- Legal Support
Cyber insurance often includes legal assistance, helping your business in the complex legal system surrounding cyber events. It covers the costs of legal counsel, compliance with regulations, and potential lawsuits arising from data breaches or privacy violations.
- Peace of Mind
Cyber insurance can give you peace of mind by ensuring financial stability during a cyber crisis. You can focus on your business’s core operations without concern about a cyber attack’s economic and reputational impacts.
- Shows Your Commitment to Security
Cyber insurance coverage can distinguish businesses by showcasing their commitment to protecting client data and being prepared for cyber attacks. It demonstrates a dedication to cybersecurity, enhancing reputation, and instilling confidence among customers, stakeholders, and partners.
Endnote
Cybersecurity insurance offers financial protection against cybersecurity attacks. It covers expenses like investigations, legal fees, and business interruption costs. Cyber security insurance also provides legal support and peace of mind, showing a commitment to security. However, it doesn’t cover issues caused by human error or negligence.
