Cyber Insurance Explained and Why You May Need One

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Maybe you’ve already heard about “cyber insurance”, but you don’t clearly understand what the big deal is all about. Although cyber insurance can’t protect your organization from cybercrime, it can keep your business on solid financial grip in case a major security event occurs. 

The internet plays a significant role in relation to technology, social media, and transactions conducted over it. It’s used by companies and organizations to conduct business and reach out to prospective customers today. However, those channels also open as gateways to cyberattacks. These cyberattacks are usually launched by average hackers, insiders, criminals, or even nation-states and can result in extreme losses for organizations big and little. 

When it comes to risk management, you need to consider a plan by deciding which risks to avoid, accept, control or transfer. If the risk is transferred, it’s the time that cyber insurance comes into play. So is it really a big deal? Do you really need cyber insurance? Keep on reading! 

EXPLAINING CYBER INSURANCE

Also known as cybersecurity insurance or cyber risk insurance, this type of insurance covers your company from damages sustained during a security incident. It’s where you shift some of the risks to the insurance company. Another type of cyber insurance is for individuals instead of companies. 

It’s more centered on combating identity theft. 

Cyber insurance mainly covers breach events where private identifying information is lost, stolen, or disclosed. Here examples of Personal Identifiable Information (PII): 

  • Credit Card Information 
  • Account Numbers 
  • Social Security Numbers 
  • Driver’s License Numbers
  • Healthcare Data

WHY DO I NEED INSURANCE? 

This is a question that your organization would be the one to answer. A lot of factors should be considered such as organizational size, threat model, risks, budgets, potential liabilities. According to Trave Harmon, CEO of Triton Computer Corporation, which is a Massachusetts-based technology solutions company highly suggests cybersecurity insurance to every business owner. He mentioned that cyber insurance is similar to health insurance, general liability insurance, auto, and home where you need to be protected when you are pursuing an industry-standard safety and security online and with other people’s data. It’s not guaranteed that an attack won’t occur, so it’s better to be ready in the event if something happens. We don’t know what the risk can do but it’s great to have some kind protection, right? 

Cyber insurance not only applies to big companies, but it’s also for small and midsize too! Small organizations tend to lack financial and technical resources to deal with a cyber incident. If you’re an enterprise, you need to be open with the idea that 100% cybersecurity is impossible, specified increasing data volumes, digitization, and workforce mobility together with an evolving threat landscape and greater regulatory compliance concerns. Nowadays, it can be a necessity for companies to consider a risk management approach to cybersecurity issues, such as transfer of risk through insurance. 

CYBER INSURANCE POLICY 

There isn’t a standard yet for this type of insurance because the policies may differ from company to company. Now, what should you be looking for when you shop around for a policy? You need to consider the coverage for personal ID restoration services, assistance with customer notification, legal fees & expenses incurred, data recovery, and help to repair damaged systems. All of these should be your baseline, and if any policy that doesn’t include these is probably not worth the paper that’s printed on. 

Today’s cyber insurance market is really aggressive, so as a company, make sure that you shop around and test your leverage to negotiate for the best offer based on their distinctive cyber risk profile. 

Author Bio: Ivandrea Ollero is a daytime writer for Insurance Advisernet NZ, one of the largest and most trusted General Insurance businesses in New Zealand, providing leading insurance products, technology, and policy wordings. She is also a content crafter who researches and writes custom content about travel, fashion, finance, business, home improvements, health, and beauty, in order to provide helpful information and tips for her readers. Ivandrea graduated from St. Scholastica’s College, Manila, with a Bachelor’s Degree in Broadcast Journalism in 2016.