Data breaches have become more and more common these days. Needless to say, they affected a lot of individuals and companies all over the world in the past couple of years. Valuable and private data are lost or stolen during most cybercrimes, hence there is a need to protect yourself and your company from them.
To put things in perspective, did you know that 88% of organizations worldwide experienced spear-phishing attempts in 2019? And we cant always blame machines for it. Studies have found out that 95% of cybersecurity breaches are caused by human error.
A data breach cannot only put valuable data at risk but can also damage the reputation of the company as well, along with putting your customers and employees at risk. This is why cyber insurance would be a smart choice for any business that operates during this time, irrespective of the size of the business.
With the recent events, more people work from their homes than ever before. It is the technology that enables us to work from home, however, this also opens up multiple points of failure, All the more reason why a cyber insurance policy is important for a business in 2021.
Cyber insurance is a type of insurance that protects your business from any liability that may be faced due to a data breach. The data may be sensitive information like customer and employee details, social security numbers, account numbers, credit card numbers, health records, and driver’s license numbers.
Isn’t general liability policy enough?
Bodily injuries and damage to property that can happen from any of your products or services are covered under general liability insurance coverage. Most of the general liability insurance policies do not cover cyber insurance and hence it needs to be bought separately.
What does cyber insurance cover?
Whether it is a small startup or a big company with lots of branches, cyber risk is a potential danger to worry about. The bigger the company, the more damage it may cause. A cyber-attack on any company can cause a security risk, privacy risk, and operational risk.
In general, cyber insurance will protect your company from the above-mentioned risks through five different agreements of insurance:
- Privacy Liability
- Network security
- Media liability
- Network business interruption
- Errors and omissions
Let’s get into detail on these agreements
This coverage is very important for most businesses, especially the ones with privacy risk or information risk. Customer’s and employees’ information can be very sensitive and any violation and breach can expose this data to the public. This not only threatens the security of the people but will also make your business liable.
Privacy liability will help to protect you and your company from any such liabilities that may arise due to privacy law violations or a cyber-incident. The cost of defending your company from any fines incurred will be covered by this policy
This covers the infringement of intellectual property that can result from the advertisement of your services, rather than patent infringement. This applies mostly to the advertisements that are done online including social media shares, and also printed advertisements.
Network Business Interruptions
Most organizations are dependent on technology for their functioning and operation. Network business interruptions provide coverage if the operations of the company come to a halt due to a cyber-attack.
If your network provider or your network stops operation suddenly due to an incident, the lost profits, extra costs and fixed expenses incurred due to it can be recovered.
In short, this coverage pays for your lost business in case your operations stop due to a cyber-incident
Errors & Omissions
A cyber incident can keep your company from completing your contract on time, fulfill your obligations or even result in late delivery of services. Errors & Omission cover the costs that may arise due to such errors in performance or delivery of services.
This mostly includes technology-related services like software setup and consulting and other services like doctors, lawyers, engineers, and architects.
Allegations regarding breach or negligence of contract are covered under E&O. This also includes costs that may arise from the legal defense.
Besides all the mentioned legal fees, expenses, and damages, cyber insurance also helps with:
- Notifying all your customers if there is a data breach. This is mandatory under law in some places and can be expensive
- Restoring the identities of the customers and employees that are affected
- Recovering the lost or damaged data
- Repairing of the damaged computer systems and other hardware’s
Apart from these basic agreements, nowadays there are a lot of coverage additions that can be bought to provide better coverage. These additions are not easily available and proper understanding is necessary before you demand it. Some of these additions are:
- Social engineering coverage
- Reputational harm
What does not Cyber insurance cover?
Like every insurance policies, cyber insurance also has some exclusions and it is very important to understand this as well, in order to protect you and your business
- Potential profits that are lost
- Loss of value that can arise due to the theft of your intellectual property
- Cost for upgrades: the upgrades you make to improve internal technology or the security or software upgrades you make after a cyber-incident
Almost all businesses and companies nowadays are dependent on computers and networks one way or the other. This dependency is going to increase as time passes and hence it is very important to be insured against potential cyber threats.
Cyber insurance will help to safeguard your organization and help you survive financially in case any attacks happen. So, it is very important to make sure that the insurance agent knows what type of business you are running and to provide all the necessary details so that the agent can customize an insurance plan according to your company’s needs.
The best plan will guarantee the best protection to your company and people dependent on it.
Let us help you choose the right cyber insurance policy!
Choosing the right cyber insurance policy for your business can get quite tricky. If you are confused about which insurance policy to choose or need more info on what we have discussed here, then contact RH Insurance Agency. We provide our clients with insurance assistance to help them make the right purchase decision.