With the growing rate of cyberattacks to consider, it shouldn’t be surprising how insurance providers have adapted to the situation. These days, most credible insurers will have policies that cover incidents of cyber attacks on businesses both big and small.
These policies factor in the risk of having an organization’s network breached by hackers or like-minded individuals. These breaches could be a result of malware or ransomware—and that’s the problem.
Anyone could download files off the internet that could be infected with ransomware and malware. These files could then spread this infection throughout the network, eventually infecting all accessible files on the network.
What happens after could result in high expenses in the form of repairs or expenses due to any possible legal action taken against your company, neither of which is something to look forward to.
The Growing Threat of Cyber Attacks
Cyber attacks in the past years have evolved so much that these days, ransomware is often offered as a service on the dark web. Ransomware-as-a-Service (RaaS) has commodified these viruses so that just about anyone can target any business online.
With just ransomware, a company can suffer cyber extortion and hefty ransom demands. These are held against the threat of the release of sensitive information such as clients’ personal data.
With sensitive data at risk, companies will of course try to satisfy the demands. The problem is that not all hackers play fair.
What happens to others is that their data is deleted regardless of the reaction of the victim. These kinds of incidents have caused a few companies to keel over as an effect of all the losses sustained.
And that’s just ransomware. Malware is another form of security issue present with any company connected to the internet. These can result in locked computer systems, affecting business operations among other things.
Compounding the issue is how widely the victims are targeted. 43% of these attacks involve small businesses, which are those who would probably not have thought of cybersecurity as an issue. This misconception leaves many unprotected.
What is cyber insurance?
Cyber insurance involves any policy which provides coverage against any form of a cyberattack or liability. First-party coverage and third-party coverage should be considered by anyone looking for cybersecurity insurance.
Who Needs It?
The problem begins when companies don’t understand the kind of coverage they need. This often comes as a result of not knowing what cyber insurance should cover as well as what the company is involved with.
Companies, especially those involved in collecting and storing sensitive information, are always at risk of cybersecurity breaches and attacks. This gives reason for most companies to immediately look for coverage.
As we mentioned before, even small businesses are at risk of cyberattacks. This could be a simple result of people thinking that only big businesses with lots of clients are susceptible.
Particularly, companies that deal with a lot of IT work should consider cybersecurity insurance. This prevailing need for internet access will put the company at risk should a breach occur within their network. This is because of the availability of rentable ransomware and malware that could be used against them.
This rentable ransomware is also a symptom of something much worse; the growing market behind this ransomware and the industry surrounding it. With this kind of growth, you can expect more “investors” and “businesses” to pop up.
This threat is especially hazardous to companies involved with eCommerce or those who process online payments. Their access to transactions will make them a target for hackers looking for a big catch.
What Does Cyber Insurance Cover?
Let’s look at things generally first. Like other types of coverage, cyber insurance will look at liabilities and see if they are third-party or first-party.
Part of being in business is fulfilling responsibilities on your end, right? One of those responsibilities is the safety of customers and clients’ information. Losing that will guarantee your company trouble.
Damages incurred directly because of a covered cyber attack are seen as a first-party liability case. These are cases wherein the insured party needs to pay for operational expenses and the like during their business interruption.
Looking at the same example, third-party liability would involve your clients filing for damages against you. These cases will see the insured party on the receiving end of a claim. Insurance coverage here will help the insured pay for attorney fees, court settlements, and other similar damages should they occur.
Generally, you can expect the available coverage to fall under any of these four categories:
- Network Security and Privacy Liability
This includes coverage of incidents involving a breach of the organization’s network and computer systems. These could be a result of malware, ransomware, cyber attacks, and the like. As such, this kind of coverage is most sought after by companies.
- Media Liability
Media liability addresses the possibility of data breaches resulting in copyright infringement laws. Publicly released private data could include copyrighted information, resulting in lawsuits. This coverage intends to cover any damage control on your part as well as any attorney’s fees you might incur.
- Errors and Omissions Liability
Cybersecurity incidents will most likely result in a few missed deadlines and erroneous work. These delays and errors could be due to a faulty computer system or an unsecured network limitation. This liability coverage intends to address these issues.
- Network Business Interruptions
Similarly, these unsecured network limitations could be a result of network interruptions. This kind of coverage focuses on these and includes provisions for cases involving a third party such as your network provider. Given an interruption in operations due to these incidents, claims can be made with the insurer.
What Isn’t Covered?
To manage expectations, let’s talk about what’s not included in the coverage. This is important for anyone looking for protection but is unaware of what is protected under the policy.
Generally, you can expect cyber insurance to not include any potential income that was lost, any loss of value to any of your property after the cyber incident, and any upgrades your business might want to get in order to address cybersecurity.
It should be easy to understand why these expenses aren’t included. These fall under the company’s responsibility after all and have nothing to do with the insurer.
Figuring Out the Kind of Coverage You Need
The problem with any insurance company after all is that it is impossible for them to make a one-size-fits-all cybersecurity plan. That would be too expensive. Each policy will have its own set of coverage options and payouts.
What You Should Consider
While it would be easy to check and read through a catalog of available insurers for cybersecurity, you would still need to analyze your company’s needs before getting an accurate offer from the insurance provider.
What kind of data will your business be collecting? Will you be collecting addresses? Sensitive information is valuable information in the hacker’s eyes so it’s best if you have as little as possible.
Another point of consideration is your budget for business insurance. This is important as it will be the limiting factor in the kind of coverage you could get. Most see it as a balance of what they might lose in a data breach versus what they might lose paying the premium.
The best way to answer this question would be to perform a self-assessment of your business’ capability to withstand a data breach and/or loss. Of course, this could also provide you insight into where you might be able to “reinforce” the network.
How Do I Find an Insurance Provider?
The easiest way to go about this would be to visit review sites of insurance providers who offer best identity theft insurance. These review sites will offer insights from past and present customers, giving you an idea of what to expect when you choose the specific insurer.
Of course, some of these could be biased or not have enough users to provide an accurate review. This might take you some time to filter through but should provide a wider view of the available options.
You could also do the brute force method of going through a list of insurers and contacting them directly each time. This might take a lot longer but will also give you a chance to clarify any details you may have seen about their policies.
Lastly, you could opt to go through insurance providers. Understand though that this may add a hefty overhead to the total cost as the broker will need to make a living off the deal. The advantage here is the broker’s experience. They should be able to point you in the right direction given their line of work.
At the end of the day, the best way to ensure your company’s security is to understand the state of cybersecurity and cyber insurance in the modern world. With all the changes showing up each month, it’d be easy to get lost in your research.
If you have any questions, let us know in the comments below!