Cybersecurity insurance is a no-brainer for most mid-size and growing businesses. This insurance policy helps protect organizations from the financial and legal consequences of security incidents such as cyberattacks and data compromise. While cybersecurity insurance cannot protect you from falling victim to these threats, it can help minimize business disruption and cover the financial costs that accompany dealing with and recovering from an incident.
It’s not a matter of “if” your business gets hit, but “when.” Cybersecurity liability insurance won’t solve all your IT security problems, but it will help you overcome the issues you face when your business inevitably falls victim to an attack. It’s important to choose a cybersecurity insurance policy that can minimize the impact of an attack and cover your major business risks. In this article, we’ll explain what cybersecurity insurance can do for your business, and what you need to know about your coverage options so you can choose the best-fit policy for your needs.
What is cybersecurity insurance?
Cybersecurity insurance protects your businesses from financial losses caused by cyberattacks, including:
- data breaches and theft
- system hacking
- phishing scams
- ransomware extortion payments
- denial of service.
Cybersecurity insurance helps reduce the devastating effects of a claim and covers any cost related to IT forensics investigation, data restoration, legal liability, and customer notification.
What does cybersecurity insurance cover?
Most business insurance policies do not cover data breaches and IT security incidents. Cybersecurity insurance helps fill this gap by taking on the immediate costs your business incurs following an attack, including:
- investigative services
- business interruption coverage
- data recovery
It can also cover damages your customers or partners face from cyberattacks on your business, such as:
- legal fees
- settlement costs
- security failure
- media liabilities
In addition to helping with legal fees and expenses, cybersecurity insurance providers can assume responsibility for:
- notifying customers about a data breach
- restoring any customer-sensitive information
- recovering compromised data
- repairing damaged computer systems.
It’s essential to understand what your company’s specific cyber insurance policy covers and how. Financial losses from damages to intellectual property and your business’s reputation are often not covered, and some incidents require that you purchase additional insurance policies for protection. For example, Business Email Compromise (BEC) is a rising attack trend in the SMB community and these kinds of attacks are often not covered without subscribing to an additional, BEC-specific policy.
It’s important to note that while cybersecurity insurance mitigates costs from a variety of cyber incidents, it doesn’t cover losses related to damaged customer trust and industry standing. Why do you need cybersecurity insurance?
Most midsize and growing businesses are still behind the curve when it comes to IT security awareness and protection, and even more, are struggling to keep up with the evolving threats their staff face on a day-to-day basis. Cybersecurity insurance covers risks that are real and happening every day. Midsize and growing businesses are prone to thinking they’re not “big enough” to be an appealing target for hackers. In reality, many of these companies are easy prey for criminals looking to exploit lucrative data and administrative credentials they can use for financial gain. Cyberattacks are not a once-in-a-lifetime situation, you are always at risk
You want to have the right coverage to protect against damages caused by these electronic threats to your computer systems and data. These threats lead to theft, damage, or misuse of sensitive information or other vital technologies that often result in downtime and recovery costs that include specialized repairs and legal fees.
How or where do I get cybersecurity insurance?
Cybersecurity insurance is a product that is growing in scope and size as risks continue to evolve and exploit the growing reliance of businesses on technology and online services. Cybersecurity insurance can be purchased through reputable business insurance providers and stands as an individual policy. It’s often not included in traditional business insurance policies, like general liability or business owner insurance. They now get updated risk insights generated out of the continuous assessment process. This allows the insured to work with security partners to address additional risks. The cycle continues as the insured can contribute to an improved loss ratio for insurers.
If you rely on technology, cybersecurity insurance is essential for minimizing business risk. Cyberattacks are occurring every day, so sourcing a cybersecurity insurance vendor with the right security measures in place to protect your business. How well you defend against a potential attack defines your IT security reputation among customers and cybersecurity insurance providers.
The greater the number of successful attacks on your business, the greater the cost of cyber insurance, and the greater the risk of losing customer trust and loyalty. You need cybersecurity insurance to make sure you are doing your part to follow ITS best practices to minimize insurance costs and receive maximum coverage.
We apply our Framework for Successful IT approach to all aspects of our outsourced IT services and consulting. Find out more about how our team can help you understand your cybersecurity needs and goals and schedule time to speak with an Aldridge team member today.