You’ve heard the term “cyberspace.” You may have visited a cybercafé. You know of businesses that have suffered from cybercrime. But are you familiar with cyber insurance? It’s one of the best weapons businesses can wield against the effects of cybercrime.
What is cyber insurance?
This type of insurance is designed to cover a company’s liability if data breaches occur that release sensitive information such as customers’ Social Security numbers, health records, or credit card numbers.
Doesn’t liability insurance cover these situations?
Cyber coverage is often excluded in a general liability insurance policy. The general policy typically covers property damage and bodily injuries resulting from a company’s operations or services. This does not encompass the issues that arise with cybercrimes.
What does cyber insurance cover?
Policies vary and may be customizable to suit each company’s needs. Typical coverages include:
Legal fees: Even a small data breach can generate significant legal expenses. From lawsuits filed against the company to those the company needs to file, cyber insurance covers the many expenses involved.
Notifications: If a data breach occurs, the business must notify its customers. This could take the form of snail mailings, phone calls, emails, or other forms of communication. Cyber insurance covers the expenses incurred with these notifications.
Restoration: A cybercrime might result in one affected customer or thousands. The company affected might be responsible for restoring personal identities for each of these customers. The cyber insurance policy will ensure coverage for the cost of customer restoration.
Recovery: Data that has been compromised needs to be recovered. Whether the attack was via ransomware, stolen files, or viruses, the company under attack must expend resources to get the affected data back under its control.
Repairs: Cyberattacks often damage computer systems. Cyber insurance offers coverage for the cost to make these repairs.
Who needs cyber insurance?
Almost every modern business relies on cyberspace for some aspect of its operations. If you’re not sure whether you need cyber insurance, ask yourself the following questions about your company. Do your employees rely on computers to complete their work? Does your company manage or store personal customer data? Do you use cloud services? Could your company financially survive a cyberattack?
The answers to these questions will clarify whether or not your business is in need of cyber coverage.
How can I prevent cybercrime?
Of course, the optimal scenario for any business owner is to never fall victim to cybercrime. Business owners can take steps to prevent these offenses. First, put proper security measures in place. Protect computers with appropriate security software. Second, educate employees. Make them aware of common scams that result in data breaches. Train them on proper security protocols. Lastly, keep a close watch on your systems. Track security logs and analyze systems for suspicious activity. Watch account balances carefully. Take immediate action if something seems off track.
How much cyber insurance do I need?
This depends on your business size, operational costs, and risk level. Consult with your insurance carrier to determine the right coverage for your needs.