Why You Should Talk to Your IT Provider Before Getting Cyber Insurance
Every day, a firm, whether large or small, falls prey to a cyber assault. To be precise, a company experiences an attack every 39 seconds. It is getting so bad that, for unaffected organizations, it is a question of when they will get breached, not if they will be breached. This brings the spotlight on a particular group of professionals, or rather the service these professionals offer – cyber insurance. How does cyber insurance work? Is it worth it? Questions like this must be asked of IT experts.
But first, let’s define cyber insurance.
What is Cyber Insurance?
Cyber insurance, often known as cybersecurity insurance or cyber liability insurance, is a contract that a company may buy to help decrease the financial risks of conducting business online. The insurance policy transfers part of the risk to the insurer for a quarterly or monthly charge.
What does Cyber Insurance Cover?
Cyber insurance will cover a company’s IT system, as well as personal and private data, in the case of a security incident or attack. Below are the classifications of cyber insurance coverage:
- First-party coverage: This covers the expenses of restoring data, removing malware, and notifying authorities and third parties, as well as monitoring and surveillance costs and lost income as a result of business disruption.
Costs associated with cyber extortion are also covered, such as the cost of experts mobilized to prevent the threat of blocking or data theft from being carried out. Some insurers will even agree to pay the ransom if no other option is available, although this is becoming uncommon by the day. This assurance should extend to the policyholder’s service providers that operate its IT system or host its data in the case of an incident.
- Assistance and crisis management: This insurance provides the affected company with a 24-hour hotline to connect with crisis management experts, IT professionals, and legal consultants. This service may be activated within hours after an assault and is critical in handling the crisis to limit its impact, particularly on the company’s reputation.
- Civil liability coverage: covers the expenses of defense and damages, if any, in the case of third-party data protection claims or infringement in electronic content distribution.
What Does Cyber Insurance NOT Cover?
The main offerings that cyber insurance does not cover are
- property damage
- personal injury,
- loss due to wear and tear of company data carriers,
- infringement of commercial patents
- financial loss other than property damage
- a lack of compatibility between digital software and data, or between software programs,
- failure or breakdown of public utility infrastructures,
The duties imposed on the policyholder vary from one insurer to the next, and non-compliance may result in the policyholder losing coverage.
Seeking guidance from an IT professional and/or broker is an excellent choice, especially as insurers’ criteria and conditions alter over time, especially given the exponential growth in the incidence of cyber assaults in recent years.
Other things not covered are expenses for new elements introduced as a result of an event (e.g., software upgrades) and expenditures and losses connected to a lack of capital caused by an insured loss.
How Much Does Cyber Insurance Cost?
Cyber insurance premiums are often determined by the covered entity’s yearly income and industry. To be eligible for coverage, an individual or institution must generally submit to a security audit conducted by the insurance company or present documents using an authorized assessment method, such as that provided by the Federal Financial Institutions Examination Council (FFIEC). The documents generated by approved assessment tools or the outcome of a security audit will influence the types of coverage offered by the cyber insurance provider.
What to Expect When Purchasing Cybersecurity Insurance
Be prepared to answer detailed questions about your security procedures and risk management policies. For example, cyber insurers may be interested in, as well as how you handle multi-factor authentication or web content filtering, or how you do phishing testing regularly.
Cyber insurers assess cyber risk using various models and criteria. While some companies, make their evaluation measures public, others base their cyber risk assessment report on a methodology developed by a government agency/body such as the National Institute of Standards and Technology (NIST). While the criteria and methodologies used by insurance companies differ, they all have a common baseline: robust, proactive cybersecurity risk management.
Current and Future Trends in the Cyber Insurance Sector
The cybersecurity industry is still in its early stages, and many businesses are opting out of this sort of insurance due to the unclear return on investment (ROI). In the United States of America, the Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) is pushing firms to strengthen their cybersecurity in exchange for additional coverage at lower costs.
Because cybersecurity insurance is new, coverage will differ greatly between providers. Companies should carefully evaluate policy specifics before selecting a policy to ensure it has the required safeguards and measures. Furthermore, businesses should assess if their policies protect them against existing and new cyber events and threat profiles. Having an IT professional advise you on what you need to insure in your business as a professional.
AhelioTech Is Here to Meet Your Cybersecurity Needs!
Not sure if cyber insurance is worth it? Let us help you decide through a proper analysis of your business. We can also suggest the best cyber insurance coverage for your business.
Contact us for a consultation today!