The demand for cyber insurance is starting to increase. As a result, the price of cyber insurance is starting to increase drastically. One of the main reasons for this increase is that cyberattacks, in general, are starting to become a significant problem for all organizations.
With an increasing number of organizations operating online, the risk of cyberattacks is starting to increase significantly. As a result, cyber liability insurance premiums are starting to increase.
Here’s everything that business owners need to know about cyber insurance, how it works, and whether they need to decide on a cyber insurance policy.
What is Cyber Insurance?
Cyber insurance, or cyber liability insurance, is an insurance policy that covers organizations against the potential fallouts from cyberattacks and hacks. Organizations that have a cyber insurance policy can help minimize the level of business disruption during a cyberattack.
The policy can also cover some of the financial costs of dealing with the attack and recovering from the issue.
A more formal definition of cyber insurance dictates that it’s a contract between an insuring party and a company that protects against cyber or network attacks. While cyber insurance is starting to become a necessity, it doesn’t offer coverage for everything.
Organizations need to ensure that they understand what coverage their cyber insurance policy offers. Arguably, it’s even more important for organizations to understand what damages their cyber liability insurance policy doesn’t cover.
Even though having cyber insurance is a way for an organization to ensure that they have some form of protection, they’re ultimately responsible for their own safety in the case of a cyberattack. The insurance provider won’t automatically assume responsibility for everything.
Business owners need to understand that getting cyber insurance is the sure-shot cure for all their issues. But, unfortunately, no insurance providers offer any sort of service that can prevent a hack or a network attack.
Who is Eligible for Cyber Insurance?
Any organization or business that operates online is eligible to apply for cyber insurance. So whether it’s a specific component that’s online or the organization stores data electronically, they’ll definitely benefit from having cyber insurance.
Most modern-day organizations rely on technology to conduct their business and operations. That’s why pretty much every modern business needs to rely on cyber insurance.
Any sort of private personal data like the contact details of different customers and staff, other forms of intellectual property, and sensitive financial data are all very lucrative propositions for cybercriminals.
These criminals attempt to break into an organization’s cyber network and look to either sell the data off or use it to blackmail the organization. Even if the hackers don’t want to take anything, they can potentially cripple the network with ransomware.
When the business’s network goes offline, it becomes a real challenge for them to perform their standard operations. That’s why so many companies look to adopt a cyber insurance policy that provides coverage in case of ransomware.
What Sort of Attacks Does Cyber Insurance Cover?
There are many different types of incidents that could trigger an organization’s cyber insurance policy. But right now, the most common forms of attacks that trigger cyber-insurance claims are ransomware, fund-transfer fraud attacks, and business email compromise scams.
How Much Does Cyber Insurance Cost?
The cost of a cyber insurance policy depends on a number of different variables. These factors include the size of the business and the level of revenue it manages to generate.
On top of these factors, a few others can impact the overall cost of cyber insurance. The type of industry in which the business operates also has a significant impact on what their insurance coverage is going to cost.
If the business deals with more sensitive data, they’ll have to pay more for insurance coverage. Additionally, if the network doesn’t have proper security protocols in place, then insurance providers will charge more to provide coverage.
Insurance providers also take into consideration whether the business has a tendency to fall victim to cybersecurity attacks. Suppose the organization has had trouble with hackers in the past. In that case, they’ll have to pay more for a cyber insurance policy.
Organizations that operate in industries that are dependent on sensitive data like health and finance are big targets for cyberattacks. As a result, insurance providers tend to charge more from businesses that operate in these industries!
What Does Cyber Insurance Cover?
Cyber insurance coverage ultimately depends on the insurance providers. Depending on what provider the business owners pick, they’ll receive coverage for different situations. Generally, though, cyber insurance tends to cover all the immediate costs that come with cyberattacks.
According to cybersecurity company AttackIQ, a comprehensive cyber insurance policy will cover the cost of security failures. These security failures also take into consideration the cost of data recovery, system forensics, and the legal defense costs that the organization will need to cover.
The cyber insurance provider may also take charge of underwriting data recovery and system forensics. These would help the insurance providers cover a specific portion of the costs that come with investigating the cyberattack and helping the organization recover.
In some cases, the cyber insurance providers also cover the cost of giving in to the hacker’s demands and paying a ransom. However, this policy tends to put the insurance providers in direct conflict with law enforcement. In addition, they argue that paying the ransom just contributes towards more cyberattacks.
However, sometimes it makes more sense for the organization to pay the cybercriminals rather than face the massive forensic bill.
Business owners should especially be vigilant regarding the Business email compromise phishing scans. The BEC scams typically involve scammers posing as CEOs, suppliers, or other trusted contacts and then dupe people into transferring massive amounts of money.
While some insurance providers offer coverage for BEC scams, it’s still not on the radar of a majority of insurance providers. Even those that provide BEC scam coverage often do it in the form of a separate policy.
These aspects make it essential for organizations to learn about all the different situations they’ll receive cyber insurance coverage. At the same time, business owners need to learn about what cyber insurance doesn’t cover!
What Doesn’t Cyber Insurance Cover?
There are a few business aspects and operations that are essential to organizations, but insurance policy providers offer no coverage for them. It’s absolutely essential that you protect the assets to allow for proper management.
Cyber insurance isn’t at the level where it can match up to the potential risks and issues caused by a cyberattack. For example, business owners receive no coverage on the loss of intellectual property due to cyber insurance. There’s also no coverage for the reputational costs that are a potential fallout of the cyberattack.
Most insurance providers only offer coverage for scenarios that occur as a direct aftermath of the cyberattack. In the long run, the company might lose customers because they develop a reputation for having poor cybersecurity. There are no insurance providers that offer coverage for these kinds of situations.
For modern businesses that want to operate online, getting cyber insurance is a no-brainer. However, businesses need to understand exactly what cyber insurance covers. That way, they can assure that they manage to protect their digital assets in the best manner possible!