Why Is Cyber Insurance Important for Your Company?

Why Is Cyber Insurance Important for Your Company?

As the world becomes more data-driven, cyber crimes have become more prevalent, and the need to cater and secure organization’s digital assets need to be taken. Cybersecurity measures can prevent attacks, but they do not necessarily guarantee 100% immunity to cyber-attacks. This is where cyber insurance comes in.  

What is cyber insurance?

Just as we have insurance covers for diverse domains, e.g., health insurance, property insurance, marine insurance, etc., We also have cyber insurance, which can also be referred to as cyber-liability insurance. Similar to any other insurance cover, the purpose of cyber insurance is to safeguard against financial losses that may occur due to certain risks. Cyber insurance policy allows you to have insurance coverage for losses that can be incurred from hacking threats and other cyberattacks or mishaps. 

Importance of cyber insurance

it is of importance for people to understand that general liability insurance, in most cases, will not protect them from a cyber-attack event, and resultant losses can be pretty devastating, to say the least. And hence the need to having a cyber insurance cover is paramount.  

There are a couple of ways cyber insurance helps you to protect your business. Cyber insurance can provide coverage for:

1. Costs incurred due to a cyber-Breach: 

In a cyber insurance policy coverage, among the reimbursement of the costs you are likely to find:

Cost of data restorations, which will cover the expenses for the restoration and/or replacement of data, software, and programs that may have been affected by the cyber-attack.

Costs of notifying parties affected by the data breach. This coverage assists in meeting business laws and regulations that require the company to inform parties when there occurs a compromise in their personal information. 

Expenses incurred for crisis management: crisis management may involve securing computer professionals, attorneys, forensic experts, or even PR experts to assess the different levels of incurred damages and how to mitigate them.

Income loss and miscellaneous expenses incurred: These are the sustained losses by the business and costs incurred due to restoration operations. 

Expenses incurred from Cyber Extortion, for instance, expenses from payment of ransom from a ransomware attack. 

2 . Costs incurred to cover Claims and Lawsuits:

Most cyber insurance policies provide coverage for settlements that a business may incur claims-made (policy providing coverage when a claim is made). Cyber insurance policies may provide cost coverage for:

Fines for Regulatory Proceedings include paying for attorneys and penalties imposed to the business by the regulatory agencies overseeing data breach laws. 

Costs for electronic media liability, which may include coverage for lawsuits against media liability such as copyright infringement or invasion of privacy. 

Costs incurred due to network security and liability, which covers the claims made against the business arising from errors such as negligence, omissions, or errors, such as the failure to prevent a breach or protect sensitive data.

It is no doubt that cyberspace is far from being perfect, more so when it comes to the security aspects. However, you need the technology and cybersecurity measures to have a successful business in the current age. Still, it is also advisable to be prepared for the unknown by having a business continuity plan and having cybersecurity insurance cover for your business.