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
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.