Nearly every company, of every size, is exposed and vulnerable to cyberattacks. Your company’s privacy, confidential information, and operations are at risk of exposure. This is a massive problem for organizations, which is why more and more people are turning to cyber insurance to protect their businesses from a dangerous, and costly, situation. In 2020 alone, cyber-attacks have cost businesses $150 million to rectify. While both big and small companies are affected by cyberattacks, they really can take a toll on small businesses. Shockingly, 60 percent of small businesses close after falling victim to a cyber attack.
Cyber insurance is essentially an insurance policy that protects businesses from the fallout of cyberattacks. It is often referred to as cyber liability coverage or data breach insurance. Having this insurance policy will help you with financial support for lost files and information, as well as minimizing the stress and disruption that come with this unfortunate event.
Let’s dive deeper into the world of cyber insurance and understand what it entails and how to make the most of it. Juergen Weiss, head of Global Financial Services, Research, and Advisory at Gartner, has a great definition of cyber insurance:
"The formal definition of cyber insurance is essentially a contract between an insurer and a company to protect against losses that are related to computer- or network-based incidents."
However, this doesn’t mean that cyber insurance will cover everything or protect you against any possible attack. Like any insurance policy, you need to understand everything behind it and how it may serve you and your business. Cyber insurance policies include coverages both supplementally and others automatically. Meaning that there are first-party coverages as well as third-party coverages. First-party coverages are associated with costs your company incurs due to a cyberattack. Whereas third-party coverages protect companies from a lawsuit.
Difference between the types of Cyber Insurance Coverage:
This coverage is essential for protecting the company's privacy and information. If a company’s network security were to fail, whether it was ransomware, malware infections, data breaches, or cyber extortion demands, cyber insurance would cover this.
Privacy liability coverage protects your customers' and employees' confidential information. Highly sensitive information that is exposed due to a data breach, threatens the security of the company. It is crucial to protect the privacy and information of your company with privacy liability coverage.
Most companies are dependent on technology to function. If a company's network were to crash, network interruption coverage covers lost profits, fixed expenses, and even extra costs that were spent during the duration the network was down.
E&O (errors and omissions) coverage protects your company from cyber events that hold up the operation and performance of the business. If a company is unable to deliver services or fulfill obligations due to a cyberattack, this coverage will cover the losses.
This coverage protects your company from intellectual property infringement. This includes both online and printed advertisements as well as social media content.
The answer depends on who your policy provider is and the size policy you purchase. As with any insurance policy, the higher the coverage, the more you will need to pay for it.
However, because cybersecurity is such a huge issue around the world, many companies are doing everything in their power to make it accessible to as many people as possible.
In general, a basic cyber insurance coverage will include the immediate costs that are associated with falling victim to a cyberattack.
In the words of Mark Bagley, VP at cybersecurity company AttackIQ,
"Cyber insurance policies are designed to cover the costs of security failures, including data recovery, system forensics, as well as the costs of legal defense and making reparations to customers.”
It’s important to know this Cyber Insurance policy doesn’t cover every type of claim. You may need to have a more comprehensive plan like other businesses that cover: General Liability, Commercial Property Insurance, Professional Liability Insurance, and Employee Practices Liability Insurance.
The coverage examples described here are hypothetical claim scenarios and are intended to show the types of situations that may result in claims. These scenarios are not based on actual claims and should not be compared to an actual claim. Whether or to what extent a particular loss is covered depends on the facts and circumstances of the loss, the terms and conditions of the policy as issued, and applicable law.