In the list of top 10 global business risks, cyberattacks are mentioned as second according to the World Economic Forum. The FBI reports as many as 4,000 new attacks are taking place every day.
With reports of cyberattacks such as data breaches, denial of service attacks, malicious code insertions and ransomware, businesses are now looking into their insurance policies for coverages for such events.
If you are wanting to make the smart choice of having your business insured against cyberattacks, here are some FAQs:
1. Is there a Standard Cybersecurity Insurance?
No. A one-size-fits-all policy rarely works for most businesses. Cybersecurity insurance policies, in its core, are quoted depending on a business’ needs for cybersecurity insurance and risk tolerance. This makes cybersecurity policies modular and complex in nature.
It is a wise decision to purchase a policy based on your business needs and not on cost.
2. Would Cybersecurity Insurance Prevent Attacks?
No, Cybersecurity Insurance will not help your company prevent attacks. However, the insurance is a great safety net in case you do get attacked. Data breaches or hacks can be a very expensive risk management lesson, the average total cost of a data breach is $3.86 million according to IBM. These costs can account for lawsuits, efforts to recover lost and/or damaged data, foregone revenue due to loss of reptation, and more.
Cybersecurity is a practice of constant vigilance and awareness. Insurance, on the other hand, can cover some costs of a data breach or an attack. Having tight security measures coupled with good data handling practices can prevent your business from getting hacked. Therefore, cybersecurity is “baked in” your business and not “bolted on”.
3. What are First and Third-party Cybersecurity Policies?
First-party cybersecurity insurance covers your business in the event your business is a victim of a cyberattack; from notifying your clients of the breach to getting through loss of revenue.
On the other hand, third-party cybersecurity insurance covers from liability if a third party brings claims against you. Typically, applicable to companies that assesses digital security. Third-party policy also is applicable when a gap in your own security ends up passing malicious code or a virus to someone.
First-party insurance is usually enough for non-IT businesses.
4. Would my Business Owners Policy Include Cyber Liability of Data Breach Insurance?
Generally, cyber and data breach insurance coverages do not come with a business owners policy (BOP). Some insurers can offer additional endorsements to your BOP and it is a wise thing to understand the specifics of the coverage.
Business owners policies can cover for property your company is using for business operations, such as computers, laptops, servers, and other related hardware but, BOP policies do not cover that data or information that housed within these hardware and will not cover you from any liability that results from the loss of customer data.
5. Would General Liability Policy Cover Cyber Liability?
A general liability policy covers your business, employees and the work you do in the event that your business causes damage or bodily injuries to a client or customer.
While cyber liability insurance covers your business from lawsuits that result from stolen, lost, or compromised data and IT systems for which your business is liable.
6. How Much Does It Cost?
Just like with any other insurance policies, cyber insurance rates are affected by variety of factors. These can be your network security, security history, data security measures and claims history may all affect your rate.
Your insurance premiums will also depend on the amount of coverage your business needs. If your business is responsible for handling sensitive customer data you would need as much protection as you would need but if you are a small business that does not regularly deal with such sensitive information, you may not need much.
The modern business owner must do what is necessary to protect their businesses. Whether your business is technologically engaged or a brick and mortar that occasionally uses technology, it is time to review and consider any potential gaps in your existing businesses insurance policies.
Do you need help if your business needs cyber liability insurance? Unsure of what or how much coverage you need? Reach out to us!