In the digital age, data is worth more than gold. News of a breach in security and the leaking of customers’ private and confidential information can bring down the value of stocks (just think of what happened to Facebook!). Companies can also lose valuable business information, while e-commerce companies will have to shut down websites and lose their profit until the security breach is resolved.
That’s why cybersecurity insurance (sometimes called data-breach liability insurance) has become so critical to businesses today. It’s one of the newest types of insurance coverage, so a lot of people struggle to understand what it does and the kind of protection it offers. This simple guide to cybersecurity insurance can help.
What Is Cybersecurity Insurance?
This insurance policy provides coverage for instances when companies lose data because of a security lapse, cyber attack, or a problem with the network. Since these problems can impact revenue, and cost money to resolve, cybersecurity insurance coverage can help mitigate the financial loss.
How do I know my company needs Cybersecurity Insurance?
While big commerce companies like Amazon or corporate giants like Facebook or Citibank obviously have cybersecurity insurance, even small or medium-sized companies can benefit from it. In fact, studies show that 7 out of 10 cyber attacks are actually directed at smaller organizations, which don’t have very high-tech security systems or internal IT departments that can resolve the issue quickly.
Smaller companies are not only more vulnerable to attacks but are more likely to be financially affected. The cost of investigating and fixing a cyber issue, or shutting down business until it’s resolved, has a huge impact on businesses that already have modest revenue margins. Cybersecurity insurance is a much-needed safety net.
What are the kinds of Cybersecurity insurance?
Insurance companies usually offer a combination of first party and third party cybersecurity insurance. First party coverage includes any data or software that was damaged or has even become irretrievable and any revenues that may have been lost because of the cyber attack. Third party coverage addresses the impact on employees, customers, and public relations.
However, it is difficult to put a concrete monetary value on “loss of reputation, brand equity or business opportunity”. That’s why it’s often not included in cybersecurity insurance, or must be quantified with several insurance riders. Most providers will have a list of scenarios that will be covered, and leave out gray areas like stolen product designs. After all, who would be able to know how valuable a yet-to-be-executed idea or strategy is?
How do I get cybersecurity insurance?
Many large insurance companies already offer this, so just ask your existing provider about the available plans. However, include your corporate lawyer and the person in charge of your digital assets to join you in the meeting and identify what level of cybersecurity insurance you need.
It’s also important to compare quotes from different insurance providers since the cost of cybersecurity insurance varies wildly. Since it’s a new type of coverage, there’s no typical industry rate, and even the kinds of protection they offer can be quite different. Shop around to find the policy that best suits the needs of your business.