With our technology-heavy society, both individuals and businesses have turned to computer power to aid in just about every task possible. Unfortunately, this also means that we are more vulnerable to cybercrime. According to Atlas VPN, the global cost of cybercrime reached $1 trillion in 2020 – making 1% of global GDP lost to this type of criminal activity.
With numbers like that, it’s no wonder that businesses are starting to invest in cyber insurance. Cyber insurance is designed to protect businesses from the financial losses that can come as a result of a data breach or other type of cyberattack.
In most cases, traditional business insurance policies will not cover any damages caused by a cyberattack. This is because they are not designed to deal with the unique risks associated with the digital world. This is where cyber insurance comes in.
What does cyber insurance cover?
There are a few different types of coverages that are typically included in a cyber insurance policy. Here are some of the most common:
- Data Breach Response: This covers the costs associated with responding to a data breach, such as notifying affected individuals, providing credit monitoring services, and hiring a public relations firm to help manage your company’s reputation.
- Cyber Extortion: This covers the costs associated with dealing with a ransomware attack, such as paying the ransom or hiring a computer forensics team to help you regain access to your data.
- Business Interruption: This covers the lost revenue and extra expenses that your business incurs if it is forced to shut down due to a cyberattack.
- Loss of Data: This covers the costs associated with recovering or recreating lost data.
- Network Security Liability: This covers the costs of litigation if your company is accused of negligence in maintaining its network security.
As you can see, cyber insurance can cover a wide range of risks. And, depending on the policy, it can provide protection for both first-party and third-party losses.
Why do you need cyber insurance?
There are a few reasons why you might want to consider investing in cyber insurance for your business. Here are a few of the most common:
To Transfer Risk: By purchasing a cyber insurance policy, you are transferring the financial risk of a cyberattack to the insurance company. This can help protect your business from the potentially devastating financial consequences of an attack.
To Comply with Industry Regulations: In some industries, such as healthcare and finance, businesses are required to have cyber insurance. This is because the sensitive nature of the data that these companies deal with makes them a high-risk target for cybercriminals.
To Protect Your Reputation: A cyberattack can do more than just cause financial damage – it can also damage your company’s reputation. And, in today’s digital world, reputation is everything. A good cyber insurance policy can help protect your business from the negative publicity that can come as a result of a data breach or other type of attack.
What type of insurance covers a data breach?
There are a few different types of insurance that can provide coverage in the event of a data breach. The most common include professional liability insurance – which can cover the costs of litigation if your business is accused of negligence in maintaining its network security – and directors and officers insurance, which can protect your company’s directors and officers from personal financial liability in the event of a data breach.
Is ransomware covered by insurance?
Ransomware is a type of malware that encrypts a victim’s data and then demands a ransom be paid in order to decrypt it. In most cases, cyber insurance policies will cover the costs associated with dealing with a ransomware attack, such as paying the ransom or hiring a computer forensics team to help you regain access to your data.
What does business interruption insurance cover?
Business interruption insurance is designed to cover the lost revenue and extra expenses that your business incurs if it is forced to shut down due to a cyberattack. This type of coverage can be extremely important for businesses that rely heavily on their computer systems, as an extended shutdown can have serious financial consequences.
What should you look for in a cyber insurance policy?
There are a few things to keep in mind when shopping for cyber insurance, such as:
- Make sure the policy covers both first-party and third-party liabilities
- Find out what the coverage limits are
- See if there are any exclusions or deductibles
- Be sure to shop around and compare policies from different insurers
Cyber insurance can be a valuable tool for businesses of all sizes. It can help transfer the financial risk of a cyberattack and provide protection in the event of data loss, business interruption, or reputational damage. In today’s world of digital dominance, having cover for cyber crime can make all the difference.