If you’re looking to protect your business from online threats, it’s important to understand what cyber insurance coverage could do for you, and how your business could meet the standards to qualify for coverage.
Cyber insurance is designed to protect businesses from risks associated with digital technology, such as data breaches, cyberattacks, and system malfunctions, but there are some areas that it does not cover. In this blog, we’ll discuss whether or not cyber insurance is worth it for your business.
What Is Cyber Insurance?
Cyber insurance is a type of insurance that covers financial losses and other expenses related to cybercriminal attacks. Increasingly, businesses of all sizes are adopting policies to protect their businesses. In fact, the global market for cyber insurance was up $7.60 billion in 2021 and is projected to grow exponentially over the next couple years.
Cyber insurance helps protect businesses against the cost of responding to incidents by providing coverage for legal fees, public relations costs, notification services, and other associated costs with restoring networks and systems.
What Does Cyber Insurance Cover?
Cyber insurance coverage primarily is used to help businesses recover from financial loss in the following areas:
Network Security
A network security policy covers the costs of responding to a network security incident. It can include expenses related to forensic investigations, notification services, remediation and legal costs associated with data breaches resulting from unauthorized access or insider threats.
Network security coverage provides cover for the initial costs you have to pay yourself, such as:
- Identity restoration
- Data restoration
- IT forensics
Crisis Management
In the event of a cyberattack, crisis management coverage helps you protect your reputation and recover quickly. This type of cyber insurance coverage encompasses expenses related to public relations campaigns, attorneys, or forensic accountants, which can allow you to restore confidence in your business’s ability to keep customers’ data safe.
Extortion
If your business falls prey to extortion from cybercriminals, cyber insurance can help by providing coverage for the cost of paying a ransom, any expenses related to investigating the attack, or legal costs resulting from an extortion attempt.
Loss of income
Should your business ever be forced to temporarily shut down in the aftermath of a cyberattack, cyber insurance policies can assist by providing coverage for any income lost from downtime.
Notifications
After a data breach, it’s necessary to notify customers and the public about the incident as soon as possible. This can involve mailing notification letters, setting up call centers, or providing credit monitoring services.
Cyber insurance coverage can assist you by offering policies that help cover the various costs of notifying affected individuals and parties.
What Does Cyber Insurance Not Cover?
Despite the various coverage options available, cyber insurance does not cover all the financial losses that can result from a data breach or cyberattack. The following are some examples of what cyber insurance generally does not cover:
Sales Loss
The direct financial losses associated with lost sales due to a cyber incident are usually not covered by cyber insurance policies. This includes potential revenue that could have been earned had the breach not occurred, as well as any long-term customer or client loss resulting from the event.
Hardware and Software
Cyber insurance coverage does not typically include the costs of replacing or repairing hardware, software, and other physical devices that were damaged in a cyberattack.
Hardware or software damage can result from malicious programs, virus infections, or other cybercriminal attacks.
Lost Equipment
Depending on your individual insurance plan, your cyber insurance coverage might not include physical or cyber theft of equipment. For example, if your laptop is stolen, any associated costs for restoring data or replacing the device are not usually covered by cyber insurance.
This might not be the case if a device is encrypted, so it’s essential to make sure that all devices have suitable security measures in place.
Third Parties
If a business outsources to a third party for services like cloud services, email, or web hosting, a cyberattack on the third party could potentially result in damage to the primary business.
In this circumstance, cyber insurance usually does not provide coverage for any losses resulting from the third party’s security breach.
Damage to Business Reputation
Cyber insurance also does not typically cover any costs associated with repairing damage to your business’s reputation following a breach of security or other cyberattack.
This can include negative press, decreased consumer confidence, or diminished customer loyalty.
Is Cyber Insurance Worth It?
Yes!
Cyber insurance is a necessary expense for any business, regardless of size. It helps protect against the financial losses associated with cyber incidents and can potentially help your business save money in the long run.
Cyber insurance coverage provides peace of mind that your business is protected against the financial losses associated with a cyber event. Cyberattacks could be immensely catastrophic—nearly two-thirds of small businesses fail within six months of an attack.
It’s immensely important for businesses to weigh their options and consider the cost-benefit of cyber insurance. It may not be cheap, but data breaches are more expensive—avoid paying potentially thousands or millions of dollars in losses out of pocket if a security issue occurs.
How You Can Obtain Cyber Insurance
Obtaining cyber insurance coverage is not easy. Most cyber insurance companies require businesses to have extensive security strategies before approving businesses for cyber insurance. However, many business owners simply don’t have the time to create a strong security strategy on their own.
Fortunately, a Managed Service Provider (MSP) can step in and create a comprehensive security strategy for your business.
An MSP has the tools, personnel, and resources to develop and implement a security strategy that your business needs for cyber insurance. With the help of an MSP, you can also reduce the cost and complexity of obtaining coverage and protect your business against cyber incidents.
Get the Cyber Insurance Coverage You Need with AIS
Secure your business with the right cyber insurance coverage. At AIS, we can help you create a comprehensive security strategy so that you can qualify for cyber insurance and be protected against potential financial losses associated with data breaches, ransomware attacks, and phishing attempts.
With AIS’s expertise, you can rest assured that your business is secure and protected. Contact us today to ensure that your business has the protection it needs.