What Does Cyber Insurance Cover; Read This Before You Buy

08 Dec, 2017 / Comments: Comments Off on What Does Cyber Insurance Cover; Read This Before You Buy / By

We live in a very digital world. More and more businesses are taking their goods and services to the internet as consumers move to shop online. With businesses and consumers going online, data breaches and other cyber-crimes are becoming more common. When a data breach occurs, personal information is compromised. This includes names, addresses, social security numbers, credit card information and more. The results can be catastrophic. Customers are at risk and businesses face serious fines and legal fees. It’s not just large scale businesses that are at risk either, small businesses are just as vulnerable. Data breaches can ruin your computer system and your reputation, all while putting your customers and employees at risk. Cyber insurance can help.

 

What is Cyber Insurance?

Cyber insurance is designed to help any business or organization that collects and stores confidential data (social security numbers, addresses, credit card numbers, driver’s license numbers and even health records) lessen the severity and or risk exposure by aiding in your recovery from a security breach or other similar cyber-attack.

 

Is Cyber Insurance Necessary?

Any business or organization that keeps confidential information or takes payments online can benefit from the addition of cyber insurance. It does not matter if your business is large or small, any organization can be at risk. The number of devices that can connect to your business network provides a much greater opportunity for those with malicious intents to access your system. Some businesses think that general liability insurance is enough, but this insurance only covers bodily injuries and property damage. If your business is hit with a cyber-attack, it will not be covered by general liability.

 

How Cyber Insurance Helps

Cyber insurance generally covers the expenses related to first-parties as well as claims by third-parties. There are a few different things that this type of protection usually covers. One of these expenses is a forensics investigation. This type of investigation is necessary for determining exactly what happened and how to prevent a similar issue from occurring again. Cyber insurance covers business losses such as those similar to an errors and omissions policy (like errors due to negligence), as well as monetary losses due to your network being offline, any interruptions in business and data loss. The policy covers both privacy and notification, sending data breach notifications to customers and other potentially affected individuals. Credit monitoring may also be provided for customers who may have had personal information compromised. Finally, cyber insurance can also help with the legal fees related to the release of confidential information, settlements and any fines you may be faced with.

 

What to Look for in Cyber Insurance

Numerous well-known insurance companies are offering cyber insurance policies. Specific cyber insurance coverage varies from insurer to insurer. There are a few different things to look for when shopping for cyber insurance for your business or organization. Find out if the insurance company offers one or more types of policies and if the policy is customizable to your business. Take a close look at the deductibles. Does the policy offer both first and third-party coverage? Determine if the policy covers any cyber-attack or if it only covers targeted attacks. Are both social engineering and network attacks covered? You should also find out if there is a set timeframe in which coverage falls in the event of an advanced persistent threat.

 

How Much Does Cyber Insurance Cost?

The cost of cyber insurance will vary. The costs and premiums range depending upon your industry, the types of services that you provide, data risks and your annual gross revenue. Small organizations may pay $800 to $1,200. Large scale organizations on the other hand, may pay anywhere between $10,000 and almost $100,000 for their premiums.

As long as businesses and consumers are online, data breaches and other cyber-crimes will happen. With cyber insurance, however, you can help to protect your business, your employees, your customers and yourself in the event of such an incident.

 

William Mahnic
William Mahnic is a Finance Professor at Case Western University and has spent more than 20 years in the finance industry before becoming a professor. Mahnic has appeared as a commentator on both TV and radio talk shows including NPR, Crain's Cleveland Business, WKYC 3 and The Washington Post. He has been interviewed in BusinessWeek, Wall Street Journal and The Los Angeles Times.

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