By the time you finish reading this paragraph, a cyber attack attempt will have taken place. One happens every 39 seconds, and 43% of them are targeting small to medium-sized businesses.
Thankfully, there are many programs, frameworks, and services that are designed to protect us from even the most complex of cybercrime. Cyber insurance is one of them.
What Does Cyber Insurance Cover?
In the most basic terms, cyber insurance—also known as “cyber risk insurance” or “cyber liability insurance” coverage—is designed to protect businesses from financial losses that result from data breaches. You pay a fee (much like a premium) and the cyber insurance company promises financial help if anything covered in your agreement should happen.
A policy can cover anything from the cost of restoring lost data to losses from the cost of lawsuits from a data breach. Other services include:
- costs of notifying customers about a data breach
- cost of credit monitoring services for affected customers
- cost of hiring a public relations firm to help manage the fallout from a data breach
- costs of repairing or replacing damaged or hacked systems
Just like insurance for your car or house, there are many different types of cyber liability insurance policies, so it is important to shop around and find one that best suits the needs of your business.
What Does Cyber Insurance NOT Cover?
While cyber risk insurance can provide some much-needed financial protection in the event of a data breach, it’s important to understand that there are some things that it will not cover. For example, it will not cover the cost of:
- damage to your reputation
- lost business due to a data breach
- the cost of investigating a data breach
- fines and penalties imposed by regulators
What to Consider When Purchasing a Cyber Insurance Policy
When shopping for car insurance, you might decide on a different policy for your sports car than the one you take out for the lemon your 16-year-old drives (and even though most of us don’t have fancy sports cars, we get the idea!). It’s the same with cyber insurance—the value of your assets will determine your coverage.
Here are some factors that you should consider when purchasing an insurance policy:
1. The Size of Your Business
The larger the business, the more at risk it is for a data breach. This means that you will need a more comprehensive policy that covers more than just the basics.
2. The Type of Business You Own
Certain types of businesses are more likely to be targeted by cyber criminals than others. For example, businesses that deal with sensitive data such as healthcare or financial information are at a higher risk. Look for a policy that covers the specific needs of your business.
3. The Level of Protection You Need
Not all data breaches will impact your business in the same way. Some can be quickly contained and the damage limited, while others can cause extensive damage. Make sure to get a policy that provides the level of protection you need in case of a worst-case scenario, especially if your industry has strict compliance requirements.
4. The Cost of the Policy
Like any other insurance policy, the cost of cyber liability insurance will vary depending on the coverage you choose. Contact multiple providers for quotes before making a decision. Remember that if your risk is high, you need a policy that covers more, which will cost more.
5. The Provider’s Reputation
Not all insurance providers are created equal. Some may have a better reputation than others when it comes to handling claims. Take the time to do your research and choose a provider you can trust.
What Qualifications Does an Organization Need to Acquire Cyber Insurance?
To get the best rates with the most comprehensive coverage, see if you meet these qualifications for acquiring cyber risk insurance:
- Your company has a data security program in place.
- You have implemented proper security measures to protect your business’s data.
- Your company has a plan in place for how to respond to a data breach.
- You have insurance that covers other risks, such as property damage or liability.
- You’re willing to share information about your business’s data security program with the insurance company.
What Are the Steps for Applying for Cyber Risk Insurance?
The best way to apply for and purchase cyber risk insurance is from a trusted managed service provider. Managed service providers are experts in IT, including cybersecurity. They will be able to help you choose the right policy for your business and make sure you are getting the best possible coverage.
While you can purchase cyber insurance from some traditional insurance providers, it is important to note that not all of them provide coverage for data breaches. Make sure to check with your provider to see if they offer this type of coverage before purchasing a policy.
When you’re ready to apply for cyber liability insurance, follow these steps:
1. Contact a managed service provider to get a quote.
2. Review the coverage offered by the providers you contact and ask any and all questions you have about coverage.
3. Choose the policy that best suits your needs. Complete the application form and provide information about your company’s data security program.
4. Agree to share information about your business’s data security with the insurance company.
5. Make a payment and start coverage.
When it comes to safeguarding your business from the financial fallout of a data breach, insurance is an important tool. Make sure to consider the factors above when choosing a policy to confirm you are getting the best possible coverage for your business.
How Partnering With AIS Helps
Partnering with a managed service provider like AIS can help ease the complexity of purchasing cyber insurance. We can help your organization implement best cybersecurity practices to meet cyber insurance requirements and also improve your general security posture. Give us a call today to learn more or if you have any questions about purchasing cyber insurance.