Cyber Insurance | The Central Texas IT Guy

Every industry makes use of internet to ease its operations. It helps in increasing efficiency of the business; however, it also serves as a gateway to cyberattacks. Cyber insurance does not guarantee protection from a cybercrime, but it ensures financial stability if such an event occurs. Thus, getting a cyber insurance is a way to transfer risks.

What Is Cyber Insurance?

Reports of high profile cyber risks have driven the need for cyber insurance to financially protect businesses from cybercrimes. Given the soaring rates of cyber-crimes, gross written premiums for cyber insurance will be $7.5 billion by 2020; as estimated by PwC.

Also referred to as cyber risk insurance or cyber liability insurance, the primary aim of cyber insurance is to help organizations mitigate risks by compensating for losses arising due to cyber related security breaches. Cyber insurance is meant to protect businesses from internet based risks such as data breaches, network security breaches, loss of privacy, theft of intellectual property, etc.

However, the cyber insurer does a thorough evaluation of the security systems & procedures of the organization before providing a cyber insurance.

What Does Cyber Insurance Cover?

It usually covers first party expenses as well as third party claims. Following are some expenses that are covered by cyber insurance:

Business Losses: The insurance policy might cover monetary loss caused due to business interruption, data loss recovery, network downtime, cost incurred on re-establishing the reputation, etc.
Privacy & Notifications: It covers liability arising due to loss of private & confidential information of the customers, employees, clients and other parties. It also includes the cost of notifying the third parties affected by the data breach as mandated by laws of the state.
Investigation: A forensic investigation is conducted to determine the cause of data breach. It is vital to know the source of breach to infer the way to repair damage. Also, it helps in ascertaining preventive measures needed to avoid any cyber breach in future.
Extortion & Lawsuits: Cyber insurance covers the legal expenses arising due to release of confidential information, legal settlements, regulatory fines, etc. Costs of cyber extortion such as those arising from a ransomware are also included in it.
Data Restoration: This coverage provides for the cost of restoring the lost data.

Things To Consider Before Taking A Cyber Insurance Policy:

Risk of data breach
Financial resources available
Coverage options available
Deductibles

Thus, cyber insurance provides businesses a smooth funding for recovery from major losses. However, the first step is to create a cyber risk profile for your company. List down all the expenses including first party & third party costs that you wish to get a coverage for.

For more information about cyber insurance, call Centex Technologies at (254) 213-4740.

May 26, 2015

Cyber insurance is designed to provide coverage from the losses incurred by an organization due to various cybercrimes such as network damage, data breaches, denial of service attacks, identity theft etc. Generally, a cyber-insurance policy protects against two types of risks – first party and third party. The former covers the losses of the policy holder whereas the latter one recompenses for the company’s liabilities towards clients, business partners and shareholders. Coverage options in a cyber-insurance policy may include crisis management, computer forensics investigation, data reconstruction, security liability, protection from cyber ransom etc.

Why Is Cyber Insurance Needed?

Every business, be it large or small, is likely to rely on information technology to some extent. In spite of using sophisticated firewalls and anti-virus software, it is nearly impossible to achieve complete security from cybercrimes. This is where the need for cyber insurance arises. It is particularly important for companies that hold confidential customer data, rely heavily on computer network to carry out business activities and deal in financial transaction processing.

Some of the reasons why companies need cyber insurance are:

Safeguarding the data of clients is one of the most important reasons to purchase cyber insurance.
Disclosure agreements and commercial contracts stored on the network may contain clauses regarding the confidentiality of the information. These can lead to expensive claims in the event of a breach.
Most entrepreneurs believe that their business is sufficiently covered by other insurance policies. However, having a cyber-insurance policy will make sure that all the network security risks are comprehensively covered.

Benefits Of Cyber Insurance

Mitigates Risk: Cyber insurance helps mitigate the risk of network attacks by increasing security measures. Insurers need to attain a certain level of cyber security in their organization as a prerequisite for coverage. This helps companies to identify the flaws in their IT system and make improvements in security practices.
Reimburses Losses And Penalties: Cyber insurance is immensely beneficial in the event of a large scale network attack. It provides coverage for the losses incurred, costs of notifying the affected individuals, hiring an attorney, legal fees and liabilities to other people.
Business Interruption Expenses: Some insurance policies also offer coverage for the income lost by a company as a result of the network or equipment failure due to the cyber-attack.

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