Cyber insurance has become very popular among businesses. There are more than 50% of companies trying to shift their risk to a third party. By the third party, we mean insurance companies. In fact, there was a survey conducted by the RIMS cybersecurity survey. According to it, more than 80% of companies are concerned about data breaching. It can cause harm to their reputation. According to the MidYear QuickView Data Breach Report, 2019 has been the worst year with records on data breach activity.
Why You Must Buy Cyber Insurance?
The main goal of cyber insurance is to transfer the security breach risk to the insurance company. With cybercrime increasing day by day, there is an increasing demand for cyber insurance. Here, we give you a few reasons why you need cyber insurance.
#1: Small Businesses Are Important
People think that only big businesses need cyber insurance. Yes, it is true that they are at higher risk. Cybercriminals target big businesses for more profit.
Also read: Cyber Security Insurance: What is it and What does it cover?
This doesn’t mean small companies are completely safe. In fact, small businesses are not equipped with the right set of resources for recovery. They might not be able to fight back once their business goes down due to a cyber attack.
#2: Credit Card Data Loss
If you lose your credit card data then get ready to face severe penalties. In case you haven’t read the merchant service agreement then take a look at it. They will hold you liable for the cost of forensic investigation.
This doesn’t stop here. For re-issuing credit cards to actual fraud of the stolen cards you are liable for it. Even the smallest retailers will have to deal with liability costs of about thousands of dollars.
#3: Loss Of Data
Data is a crucial asset for businesses. Still, it is not covered by standard property insurance. For the companies that operate online, the cost of data is more than their equipment. With cyber insurance, you will get coverage for data restoration.
#4: Social Media Is Crucial
Social media has become one of the main reasons for businesses excelling in marketing. Sometimes companies don’t think about other interpretations of their message. This further leads to claims that your company is sharing defamatory comments or copyright issues. To defend such claims you need cyber insurance.
#5: Cyber Attack On Electronic System
Your electronic system downtime can be a result of a cyberattack. Do you think your business interruption policy will cover it for you? Again a ransomware attack or the fault of an untrustworthy won’t be part of interruption policy. With cyber insurance, you get coverage for lost profits. Suppose you forget your laptop in a metro. You are trying to find it but it’s stolen now.
Also read: Is Buying Travel insurance a good idea?
The thief excesses your data and misuse it. Cyber insurance will help you cover the costs that are associate with data breaching of a stolen laptop.
#6: Breach Notification Laws
If you know about breach notification laws then you know how expensive it is to comply with it. Suppose your business loses personal data. So you have to send written notification to all the potential victims. With cyber insurance, the costs related to breach notice are covered.
#7: Third-Party Data Is Valuable
For businesses, third-party data is valuable. It belongs to their clients, suppliers, or customers. Now, if you lose that data who will pay for it? If your businesses face data breach most commercial contracts will trigger claims. In fact, customers will file lawsuits for losing their data as it might be in the wrong hands. With cyber insurance, you can deal with all of it.
#8: Reputation Is The Key
Once you build a reputation in the market, it is your biggest asset. People will choose you over others due to your good reputation. When data is lost, your reputation is at stake. People will discuss you and how you failed them. Cyber insurance will help you pay for public relations to restore the trust of people. It won’t let you lose further.
What Does Cyber Insurance Cover?
Cyber insurance typically covers these things:
To determine what led to cyberattacks, a thorough investigation is much. Forensic investigation will determine the cause of damage along with the prevention of it in the future. These investigations involve security firms and accessing data through law enforcement.
#2: Privacy Liability
Defending your company from consumer’s actions. They will even fund a potential settlement deal in case of a cyber incident. Also, sending data breach notifications to the customers and other parties.
#3: Business Loss
A cyber insurance policy provides coverage similar to errors and omissions policy. It means errors that occur to negligent reasons. Also, the coverage for financial loss due to a cyberattack on the network. From data recovery to money that you need to manage crisis everything comes under its coverage.
#4: Extortion And Lawsuits
If someone calls for ransom in order to not release your confidential data then insurance will help you. In case, data is in the wrong hands then again you need to deal with legal expenses. From regulatory fines to legal settlements, everything comes under its coverage.
By now, we hope everything is clear. It is surprising how a single insurance policy deals with so many issues. Also, there are tons of reasons for choosing a cyber insurance policy. With online business progressing even the hackers are working hard to bring businesses down. They just want profits and target all sorts of businesses. It could be small to large business. To deal with the stress of data breaching you need support. That’s what cyber insurance gives you. Even if you don’t recover your data at least you can recover the cost of it. It is peace of mind for business owners. The coverage is vast and some good companies offering such policies are AXA, AIG, etc.. If you find difficulty in understanding any of these then leave your queries in comments. We will try to explain things to you in the best possible manner. Do check out our other insurance policies that you need for various other needs.