What is Cyber Insurance?
You have done everything possible to secure your business's data from hackers and breaches. You have installed the latest software updates, are using the newest security software, and are training your employees to be cyber security aware. Does this mean that you are now shielded from all future cyberattacks? The answer is a resounding "no."
Cyberattacks may affect a company's revenue, reputation and result in financial losses. Companies must invest in cyber insurance since this can help with the repercussions of a cyberattack. The primary goal of this coverage is to aid organizations by providing them with the resources needed to recover from a cyber-attack.
Coverages Provided by Cyber Insurance
Companies should obtain coverage specific to the needs of their business to ensure adequate protection. It is essential to consider the cyber risks your business may face and select appropriate coverages. First-party cyber coverage consists of the following:
Legal costs - In the event of a data breach or cyberattack, you have a high probability of encountering legal conflicts. This coverage provides your company with a defense attorney and pays the costs associated with lawsuits and settlements for covered claims.
Regulatory penalties - International and national regulatory bodies can require an entity to pay a fine for not implementing adequate security measures.
Public relations costs - After experiencing a cyberattack, public perception of an organization can go downhill. Its customers and investors may stop doing business with it temporarily or permanently. Accordingly, this may involve hiring a public relations company to maintain or repair the organization's reputation.
Forensic costs - Forensic expenses refer to the procedures used to discover facts about an attack. This can include ascertaining, repairing, and removing the threat altogether. This payout may be used to hire a professional to measure the size of the attack and consider the lost data.
Business Interruption - These losses refer to a business’s revenue loss due to an unexpected cyber event that disrupts its normal operations, such as a data breach or a ransomware attack. In the context of a data breach or a cyberattack, business interruption losses are typically associated with lost income resulting from an attack.
Notification costs - The next step following a cyber breach is to notify affected individuals of what has happened. This notification will also inform you of what information has been compromised by the requirements of PCI DSS or the Payment Card Industry Data Security standard.
Data recovery costs - These are the costs associated with recovering lost or stolen data.
System Damage - Bricking coverage is a type of insurance that covers system damages suffered by businesses in the event of a cyber-attack that physically damages computer hardware, also known as "bricking." This type of coverage is typically included as part of a broader cyber insurance policy and may also be called "hardware damage coverage" or "cyber-physical coverage."
Ransom Payments- Reimbursement for any ransom paid (usually cryptocurrency) after a ransomware attack.
Computer Fraud - Insures against theft of funds or property specifically stolen by using cyber methods to transfer money or property from the victim.
Cyber Liability or Third-Party Cyber Liability coverage responds to lawsuits arising because of the company’s negligence due to:
- Failure to comply with governmental regulations to take precautionary measures to prevent identity theft
- Not disclosing a data breach in a timely manner to the affected parties
- If a company fails to follow its own privacy policies related to the handling of its customers’ data
- Unauthorized disclosure of Personally Identifiable Information (PII) under the insured's care, custody, and control
- Situations where a company's system is hacked and used to transmit malicious code or a denial-of-service attack to a third party's computer system
- Damage to data stored in the insured's computer systems belonging to a third party. This can occur if a company's system is hacked and data belonging to a customer or partner is damaged or destroyed
Cost of Cyber Insurance
Cyber insurance can cost anywhere from $500 to $50,000 annually, depending on your business. Some publicly owned companies may pay millions of dollars for this coverage. You can often obtain a cyber liability policy for a lower price by customizing your policy to suit your specific needs. Various variables can affect the cost of cyber liability insurance. Some of them are listed below:
Industry - The industries targeted by cyber criminals will pay more than those that are not targeted. These include industries such as healthcare, software, and financial services.
Coverage amount - The prices for a comprehensive cyber insurance policy vary based on the company’s revenue and the necessary limits needed for protection in the event of a cyber-attack. Businesses will have to determine what their loss would be in the event of a cyber-attack, depending on what's covered by the insurance policy.
Organization size - It is recognized that more prominent companies will suffer more frequently from cyberattacks, which means a higher premium will be required for cyber insurance.
Coverage type - Companies will require individual premiums depending on their aims for coverage. For example, getting insurance from a common risk like phishing emails and subsequent attacks will differ from getting insurance from an APT attack.
Number of Private Records - The number of personally identifiable information records stored plays a part in premium calculations.
Cyber insurance may provide relief in dire conditions resulting from cyberattacks. Companies will no longer have to bear the financial losses and have their resources diminished after this type of encounter. Although opting for cyber insurance may seem pricey, it is an investment choice, and its dividends can often offset the initial purchase cost.