Does Your Business Have Adequate Cyber Insurance Coverage?
As more and more businesses are becoming digital and online, cyberattacks are becoming a prevalent threat. You probably take a lot of safety measures to protect your business, but if your data is all exposed you might be vulnerable to cyber-threats. This is why cyber insurance is necessary. So, does your business have adequate cyber insurance coverage?
If no, then you’re not alone. The lack of cyber-security in a lot of local and small businesses is due to a lack of knowledge. A large portion of people don't even know what cyber insurance is. So, let’s get you on track and learn all about cyber insurance, how it works and whether your business is well protected against cybercrime.
Cyber insurance is a means of making sure you can handle the setbacks when a cyberattack does occur. In case of a data breach or ransomware attacking your digital assets, cyber insurance can help you cover the costs needed to deal with and recover from that attack.
Cyber insurance can give reassurance when there is a threat to your businesses’ security. In the case of a data compromise for instance, where the attacking party hacks into your system and gets sensitive data, it would cost you time and money to fix that breach and make your data secure again. You would also need to compensate for the data that has already been accessed.
All of this can be very expensive, and having insurance can help you soften the blow of the attack. It's a contract meant to protect you against losses you might face concerning a computer or network-based attack.
If you use technology or collect data for your business, and most businesses nowadays do, then you are at risk of data breach and you require cyber insurance. Your data is business liability and it needs to be protected with insurance. The annual Cost of a Data Breach Report from IBM and the Ponemon Institute shows that the average cost to a business to recover from a data breach has risen to $4.24 million.
While cyber insurance cannot stop you from getting attacked it can help mitigate the losses. Here are some of how cyber insurance can help you and why you need it.
In this day and age, your data is perhaps your most important asset. Data is being sold and bought at very high prices and access to the right kind of data can give your competitors or attackers a weapon to destroy your business.
This is why it’s so important to know how exactly you are storing your data and ensure that it’s safe and protected from external sources. In case your data is compromised or even lost, having insurance can help you cover the expenses of remedying the loss and also breach notifications. It can also help cover expenses to put up a better defense.
Due to the sheer amount of data that is involved in a business, knowing the accurate extent of a data breach can be a task in itself. A computer forensics team can help you figure out how much damage has been done and what kind of private customer data has been compromised, if any at all.
Often an attack can fail as well and no relevant or important data is lost. But to develop a contingency plan, you need to first analyze what the damage is. Cyber insurance will help you pay for the forensics experts and also pay for the expenses that you might face while rebuilding the business and coping with the loss.
You are required by law to notify all your customers and stakeholders in case of a data breach because often it is their data that is being leaked. These and other post-breach response costs can accumulate.
Cyber insurance can help you deal with these legal requirements, cover your lawyer costs and also get you in touch with an incident breach response vendor who will help you handle customer notifications. Law firm costs can also be covered with your insurance policy and this can help you deal with the attack much better.
You probably use an electronic device like a laptop or even a phone or hard drive to store company data. These can often be stolen or compromised, thus giving the attacker access to confidential data.
Your company therefore should take relevant measures to protect against theft by implementing passwords, not storing all of your sensitive data in one place, and also changing the devices now and then. You could even encrypt your data and store it on secure servers.
Even with all these precautions, a breach cannot be completely prevented. But these precautions help manage the loss. In case of an attack, your cyber insurance can help you pay for all the expenses related to the loss of the device such as investigating where it went, legal costs, etc.
Another important reason why you need cyber insurance is that your existing insurance policies are very unlikely to cover a cybercrime event. Most insurance policies are geared towards physical risks. But cyber threats now only affect the business digitally, but can also often have very physical consequences.
For example, there was a system shutdown in the city of Baltimore, due to a cyber breach. As a result of this, water billing and real estate transactions had to be closed off or delayed, thus causing widespread problems for a lot of people.
So, there are cases where your insurance can even cover silent cyber risks. These are risks that are not intended as a part of the cyber-attack. So these risks are often not covered by your traditional insurance policies because they stem from a cyber-attack, even though they have physical consequences.
While interest in cyber security and cyber insurance is rapidly increasing, local businesses are still the most at risk. About 57% of businesses with cyber insurance are larger businesses. Cyber-attacks have tripled on smaller businesses as they are much easier to do and they are less protected against such threats.
No matter what kind of business you are in, we will help you develop an insurance policy that is tailored to your needs. Loman-Ray Insurance Executives can help perform an assessment of your needs to identify vulnerable areas where proper cyber insurance coverage is needed.
Now that you know a lot more about what cyber insurance is and how it can help you, it’s time to question “does your business have adequate cyber insurance coverage?". If not, or if you’re unsure, reach out to your local Loman-Ray Insurance Executive to begin an assessment today.
The above is meant as general information and as general policy descriptions to help you understand the different types of coverages. These descriptions do not refer to any specific contract of insurance and they do not modify any definitions, exclusions or any other provision expressly stated in any contracts of insurance. We encourage you to speak to your insurance representative and to read your policy contract to fully understand your coverages.