Cyber insurance is a relatively new form of insurance as opposed to its Life and Health variants. Other novel types could include Engineering Insurance and Device Insurance.
With the alarming rate of cyber attacks and threats, cyber insurance is becoming more prominent as a measure to cover the loss and damages of cyber intrusions.
The gravity of cyber threats poses a dilemma to our data wellbeing. According to the IBM Ponemon Institute 2019 data breach report (via Forbes), it took, on average, over nine months to discover and remediate a data breach.
What is Cyber Insurance or Cyber Liability Insurance?
Cyber Insurance is an insurance policy that covers financial losses resulting from data breaches and other cyber events.
In our data-riddled society, cyber insurance is vital. Practically everything we do is data-centric. Customer records and details? Website analytics? Market research and reality? Data, they say, is the new oil.
When these data are infringed upon, cyber insurance is a safety net that can help recover the costs. Crafty hackers with innovative schemes are on top of their game. Irrespective of the defensive strategies we put in place, it is better to be safe than sorry if there’s an unpreventable breach.
Do You Really Need Cyber Insurance?
Do you find yourself asking whether or not you need insurance? It’s quite simple. Do you rely on technology to do business? Do you manage and store company data or customer details? Let’s streamline its importance: Do you use computers to send, receive or store electronic data?
You would need some level of coverage if you answered “Yes” to the questions above. Have you ever thought of what happens when you lose the data? Or if a hacker steals or damages the data? It could be costly to replace or restore.
There may also be sensitive data in your computer that belongs to a third party such as customers, employees or vendors. If a hacker compromises data, the owners might sue your company for damages. You can protect your company against all costs associated with data breaches by purchasing a cyber liability policy.
Companies of all sizes should secure cyber insurance. It is erroneous to think that small-sized companies do not need coverage. In reality, they stand a higher susceptibility to risks because they do not spend as much on cybersecurity as larger companies.
Cybercriminals do not necessarily target a company based on size or name. Here’s how it works: They may use bots to scan the internet and search for companies with security gaps. Research shows that hackers are looking for businesses of any size with valuable customer data they can steal and sell on the black market.
Also, people wrongly assume that security systems are a substitute for cyber insurance. New viruses and infiltrations can breach security solutions.
Cyber insurance, therefore, provides coverage that can include data theft or loss, network intrusions, information-security breaches and lost income due to system downtime.
Types of Cyber Insurance
1. First-Party Cyber Insurance Coverage
These apply to expenses your firm directly incurs as a result of the breach. For instance, this could include the cost of informing your client about a hacker attack. Coverages here include Loss or Damage to Electronic Data, Loss of Income and Extra Expenses, Cyber Extortion and others.
2. Third-Party Cyber Insurance Coverage
These apply to claims against your company by individuals that have been injured as a result of your actions. For instance, a client sues you for negligence after a hacker steals his data from your computer system and leaks it. Coverage here typically applies to damages or settlements that result from covered claims as well as the cost of your defence.
Again, it holds that anyone could fall prey to cyber intrusions. Researches have shown that both large-scale and small-scale businesses are prone to cyber threats.