Data breaches, cyber extortion, and system hacking: three things your IT, PR, and legal departments dread.
What do they have in common? All of these variations of cybercrimes can lead to real problems for businesses and their customers if sensitive information is compromised.
The COVID-19 pandemic made online shopping and other digital activities a necessity. As a result, the number of cybercrimes increased considerably, leading to sizable legal fees, technical repairs for businesses and reputation damage. Even before the worldwide pandemic, cybercrimes were escalating in major industries across the U.S., including healthcare, banking and manufacturing.
Unfortunately, cybercrime has become significantly more complicated as technology has grown in sophistication over the past decade, creating a very real risk for businesses. No business is immune to the threats of cybercrime, which is why some insurance providers offer cyber insurance policies to ensure the damage is kept to a minimum if and when attacks do occur.
What Is Cyber Insurance?
Simply put, cyber liability insurance policies protect businesses from the cost of threats to their computer systems, which could lead to premium legal or repair fees due to compromised systems or data corruption. These policies are also known as cybersecurity insurance or cyber risk insurance.
Most cyber insurance policies available offer various solutions to mitigate cyber risks, including protections such as pre-breach mitigation, post-breach response and general cybersecurity.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance covers costs like data recovery expenses and legal fees, among others, associated with cybercrimes.
Some of these include:
- Legal fees
- Regulatory fines
- Lost income from network outages
- Customer lawsuits due to privacy breaches
- Data recovery payments
Types of Potential Cyberattacks
Most cyber insurance policies define a cyberattack as three potential actions against a company or consumer:
Data extortion: Attackers demand ransom payments and threaten your company’s computer system functionality.
Data breaches: Personal financial information or protected information is stolen by hackers, leading to a nightmare of litigation and regulatory issues.
Computer attacks: Any kind of cyberattack where your company systems have been compromised by an outside party.
What Businesses Need Cybersecurity Insurance?
While all businesses that utilize technology need some kind of cyber protection or insurance, a few specific industries, in particular, are most at risk. These industries include:
- Large retailers
It’s important to note, just because your industry isn’t listed above doesn’t mean you shouldn’t have some kind of protection. Cybersecurity breaches can happen to any company, so you will want to connect with an experienced insurance broker who can help you find an affordable policy that fits your specific business needs.
How Much Does Cyber Liability Insurance Cost?
The price of cybersecurity insurance will vary greatly based on the size of the business and exposure to potential attacks.
Luckily, an array of cyber liability policies exist to ensure businesses of all sizes are protected.
One important factor to consider when shopping for cybersecurity insurance is how your network security and accessibility can greatly impact your quote. Keeping your systems up-to-date, using firewalls, utilizing multi-factor authentications and following proper security procedures will ensure a better policy deal.
Of course, working closely with a reliable insurance broker can also help. Quality brokers will help you get a plan in place so that if a breach does occur, collateral damage will be significantly less severe.
Cybersecurity Is an Enterprise Goal
Lastly, while cybersecurity insurance is great for protection and resolution when cyberattacks do occur, making sure you are investing the right amount of time and money into training and systems for your employees will greatly reduce your risk of cybercrime at the forefront.
If you need to update your current cyber insurance policy or need to purchase one, find a local insurance broker who can help you keep costs down and your online protection up.