What is Cyber Insurance and Do You Need It?
Is your company on solid financial footing? Are you prepared to weather a cyber attack? If you’re not sure, you may be interested in learning about a relatively new insurance product, cyber insurance. In this blog we’ll explain this type of insurance and help you determine if it could be beneficial for you and your company.
What is Cyber Insurance?
Cyber insurance is a type of policy that helps an organization reduce their out of pocket costs that could result from a cyber attack or security breach. This type of insurance began growing in popularity starting in about 2005, and according to PwC, roughly 1/3 of companies now have some type of cyber insurance.
What does Cyber Insurance Cover?
While no two cyber insurance policies are exactly the same, below are a few reimbursable expenses that are often included with this type of insurance:
- Business losses – A cyber attack can cause a variety of business losses, which is why a cyber insurance policy could cover items such as losses due to data loss recovery, network downtime and business interruption to name just a few.
- Forensics investigation – Typically after a cyber attack, a detailed forensics investigation is conducted to determine the type of breach and how it can be prevented in the future. These investigations can be costly and time consuming, which is why it may be advantageous to determine if a cyber insurance policy could cover these types of losses.
- Lawsuits or extortion – Legal expenses can quickly mount, especially if a cyber attack involves confidential data or intellectual property. Cyber insurance may cover costs related to this type of extortion or lawsuit.
- Notifications and privacy – When a data breach occurs, there are required notifications for all impacted parties that are mandated by law in many areas. These notifications and credit monitoring expenses may be covered depending on the type of cyber insurance you have.
Does My Business Need Cyber Insurance?
While knowing whether or not to buy cyber insurance may be a difficult question to answer, with the rise in cyber attacks, especially against small businesses, it’s something that should definitely be discussed between the decision makers within your organization. Recent data shows that almost half of all cyber attacks target small businesses, so it’s important that companies realize that it’s not just the massive companies that are impacted by cyber crime.
If you’re on the fence about whether to purchase a cyber insurance policy, it’s always a good idea to discuss your options with a licensed insurance provider as well as other business leaders in your industry to determine how they’re preparing for these types of unfortunate business realities.