What is Cyber Insurance?
October 1, 2020 By Patrick Brown
Cyber attacks are rising by the second, and businesses, both small and large, are at risk. There’s no need to look beyond today’s headlines to see why cyber liability insurance is essential for businesses today.
Garmin is still recovering from the network outage affecting its website and several customer facing applications caused by a ransomware attack. And, similarly, EasyJet, hacked in January of this year, is working to repair damages not just to its computer systems, but to its customers whose personal data (travel plans and credit card information) was accessed and compromised.
And in the months of the COVID-19 pandemic, cloud-based attacks have risen 630%, creating a growing vulnerability for people working from home.
In order to manage these risks and mitigate possible threats, many businesses are reassessing or investing in their cyber insurance policies. In this article, we’ll cover the basics of cyber insurance and what to look for in cyber insurance coverage.
What is cyber insurance?
Though the exact nature of coverage will vary from plan to plan, cyber insurance is designed to cover internet- and information technology-related risks not covered under general business liability insurance. Cyber insurance covers, for example, your business’ liability in the event of a data breach or ransomware attack which steals or encrypts business information (financial information, passwords, etc.) or sensitive customer information (credit card numbers, account numbers, Social Security numbers, etc.).
What does cyber insurance cover?
Cyber insurance specifically covers the damages caused by cyber attacks, data breaches, and other internet-related security threats including:
- Ransom payment coverage: when hackers demand a ransom, or money, in exchange for encrypted files or stolen data
- Phishing and whaling financial fraud coverage: when hackers attempt to impersonate someone else, often in email form, to trick people into sending private information
- Cyber terrorism coverage
- Third-party liability coverage: provides coverage from legal issues that arise from the breach of customer data
- Business interruption and lost earnings coverage
- Customer notice, brand, and image repair: Informing customers of data breach and providing the necessary identity repair for clients and the business
What is the difference between general liability coverage and cyber security coverage?
General liability insurance is packaged to cover property damage and bodily injuries that occur from use of your product, service, or even the operations of your business. Cyber security insurance is created to cover specific cyber events and is often specifically excluded from general liability policies.
Why do you need cyber security insurance?
The average total cost of a data breach in 2020 has been reported at $3.86 million. And the average time to fully identify and contain a breach is 280 days—yet repairing customer trust and your brand reputation will take even longer. Cyber attacks are increasing every year, especially with more and more remote work—the risks are higher and the opportunities for cyber attacks expanding. Without cyber security insurance you’re leaving your business vulnerable to more financial risk and possibly even a business-ending cyber attack (60% of small businesses that experience a cyber attack go out of business within six months).
If you’re not sure your coverage is sufficient or you’re ready to invest in the right cyber coverage for your business, start with our 3-question quiz.