Being on the internet in 2021 can carry a lot of risks. From stolen passwords and account information to stolen credit card numbers, a lot can go wrong in a matter of seconds. Cyber Insurance can protect you against hacking threats and cyberattacks.
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
Cyber insurance can help cover the costs of a wider variety of data and security related events. This includes data breaches, data theft, network outages, and reputational damage. In today’s day and age, most companies rely on the internet to drive sales, marketing, and communications. Having your customers’ data stolen or leaked can prove detrimental for a business, especially a small one. Cyber security insurance is not a replacement for internal controls and prevention, but can help lessen the consequences if you were to suffer an attack.
Who needs cyber security insurance coverage?
Cyber security insurance is important for any business that stores private information on the internet. If your customers’ private information is leaked, your business could potentially be liable for any losses they face. If your business stores any of the below information, you should strongly consider a cyber security insurance policy:
Credit and debit card numbers
Social security numbers
Full names
Home addresses
Bank account and routing numbers
Taxpayer Identification Numbers (TINs)
Medical Records
Any third-party vendors that your business deals with should also have cyber security insurance. Some examples of third-party vendors commonly used would be an accountant or an IT support provider.
An important thing to note is that cyber insurance does not help protect you against hackers or criminals; it only helps businesses deal with the consequences after that attack. You should always make sure your computers have proper virus protection and use secure passwords. If you do not have adequate cyber security controls, your insurance provider may not pay out.
Types of cyber security insurance coverage
When choosing a policy, it is important to know the difference between first-party and third-party cyber security insurance.
First Party Cyber Insurance: First party insurance is usually enough for non-tech companies and helps protect the business itself. It covers damages from your own systems being breached. A policy often helps cover costs of recouping lost data, notifying those affected by the breach, monitoring credit, managing brand reputational damage, and updating existing systems.
Third Party Cyber Insurance: Third-party coverage protects those who are responsible for allowing the data breach to occur in the first place. This is the coverage recommended for IT and tech-focused firms. It can also help cover lawsuits caused by data breaches your clients experienced while using your system.
There are many different policy types within both of these categories. First, let’s cover the first party policies:
Fraud and Theft: These policies can help cover costs related to data loss due to theft, fraud, or criminal related activity.
Forensic Activity: This can help cover the costs related to forensic investigation. This can include both technical costs and legal fees. They can be concurrent, retrospective, or prospective.
Business Interruptions: If a data breach would put a halt to your business operations and cause lost income or revenue, business interruption coverage is for you. It can cover loss of income due to not being able to operate as normal and can sometimes cover additional costs as well.
Extortion and Blackmail: In some situations, the hacker will hold your data or website hostage and demand you pay a ransom. Sometimes the ransom is paid in order to gain additional information about the hacker.
Restorative Work: Bringing things back to normal can cost money. Whether it be new computers, new software, or working with a credit monitoring company, this policy can help you recover some of those costs.
Third party policies are slightly different because the policy holder is likely worried about lawsuits and regulations in addition to reputational damage and lost income.
Litigation Coverage: This type of policy focuses on fees the arise due to court judgements, lawsuits, and fines that were imposed on the company responsible for the data breach.
Regulatory Coverage: If the government requests a breach be investigated, this policy can help pay for technical and forensic fees.
Communication and Notifications: This covers the costs of notifying the appropriate parties, such as clients, employees, and stakeholders.
Credit Monitoring: This covers the costs of additional credit monitoring that is necessary due to the incident
What does cyber security insurance cover and exclude?
A first-party cyber security policy can help cover the costs associated with the following:
Notifying customers that there was a data breach
Investigating the cause of the breach
Credit monitoring
System enhancements
Managing reputational damage
A third-party policy can include costs of litigation, regulatory fees, costs of notifying the appropriate parties, credit monitoring, and system upgrades as well.
A cyber security policy will not help prevent a data breach from happening or prevent hackers from accessing your private information. You must be proactive in protecting your customers’ private data.
Many policies don’t cover hardware replacement or property damage. Sometimes this can have negative outcomes for the policy holder. For example, say you had a laptop that was so badly infected with malware that it would be more efficient to toss out the whole system and purchase a new one.
What are the limits of cyber security insurance?
Cyber security liability coverage typically ranges between $500,000 and $5 million per event. The more employees you have, the more coverage you will need. Additionally, a business with access to hundreds of thousands of private records likely needs more coverage that a business with less than a thousand.
How much does cyber security insurance cost?
The cost of cyber insurance can vary depending on many factors, such as the size of your business, your industry, your business model, and your business’s past claims. The type of policy and your level of coverage will also impact your monthly costs, or premium. The average cost of cyber insurance in the United State is $1,485 per month.
How to choose the best cyber security insurance?
Determine if you need first party or third-party coverage: This will give you a starting point to determine what level of coverage you need for your business.
Compare insurance providers: Do research on different providers to compare the cost of the policy with the amount of coverage. You can call and ask to speak with an insurance agent, and they can go over their plans in deeper detail.
Check reviews of the provider: Look up reviews of each provider you are considering to check for any bad experiences. You want to make sure that you are choosing a reputable insurance provider with a track record of success.
