In the internet age, the need for cyber security has become increasingly apparent. Because business and commercial operations are now primarily conducted online, more organizations are vulnerable to cyberattacks. Organizations are starting to recognize that the social and financial consequences of cyber attacks are becoming increasingly difficult to manage, necessitating the development of a tool to assist them in preparing for any eventuality.
Cyber insurance is a type of insurance that aims to protect customers from data theft, data loss, extortion demands, hacking and DDoS (distributed denial of service) assaults. Cyber insurance also tries to help with crisis management and legal claims for defamation, fraud and data breaches. Data recovery, system forensics, legal defense and consumer reparation are all covered under this insurance coverage.
To make a concise and easy-to-digest explanation of how cyber insurance works, here are five things your company should know about it.
1. Who needs cyber insurance?
Almost every business should have cyber insurance, especially if it deals with consumers’ personal identifiable information (PPI). Energy, oil/gas, utilities, media, leisure and entertainment, business and professional services, IT, technology and telecoms, and financial services are among the industries where cyber insurance is most important. As a corporation in one of these industries, you don’t want to be caught in the middle of a media frenzy about data loss while negotiating a ransomware settlement with a hacker.
2. Is it cost-effective?
When compared to the impact of having to pay ransomware settlements, which usually run into millions of dollars, cyber insurance is a safer and cheaper option. According to AdvisorSmith Solution Inc.’s latest survey, the average cost of a cyber liability policy in 2019 was $1,500 per year for $1 million in coverage and a $10,000 deductible.
3. What does cyber insurance cover?
Legal fees, cyber extortions, forensic expenses, business interruption, PR expenses and data recovery are all covered by cyber insurance plans, which vary from firm to company and are priced differently.
4. What factors affect the price of the cost of cyber insurance?
While there is no set price for cyber insurance, there are a few elements that influence the cost of cyber insurance both directly and indirectly, including size, industry, firm footprint, kind of coverage and regulatory requirements.
- Size: How big or tiny a corporation is. Since a huge organization is more likely to be attacked, the cost of insurance will almost certainly be greater.
- Industry: Industries like healthcare and banking are frequently targeted by hackers, businesses in these fields may expect increased costs.
- Company footprint: This is similar to company size, but it also considers the number of offices a company has and the number of geographical places it serves. To put it another way, the more attack vectors a business has, the more cyber insurance it may require.
- Type of coverage: If you want cyber insurance that covers all types of incidents, you should expect to spend more.
- Regulatory requirements: Regulatory or compliance requirements that your company must meet may result in higher cyber insurance costs.
5. What cyber insurance company should I consider?
There are several companies that provide cyber security services; while making a decision, consider the company’s track record and present client base. Also, engage a specialized broker who is experienced in assisting businesses in determining which insurance provider is most suited to their industry.
Getting started with your cyber insurance plan
While there is no substitute for having a solid cybersecurity plan in place to prevent attacks, having a cyber insurance plan gives you that extra layer of protection that could make all the difference between going broke and staying afloat if (or when) your company falls victim to an attack.