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What Is Cyber Insurance and Why Your Business Needs It
#FocusOnBestPractices
Manoj Bonam
Chief Technology Officer
May 16, 2018
Data or information breaches and other digital offenses are becoming very common nowadays. In the past couple of years, data/information breaches have brought about real fines and lawful charges along with the headaches. The issue is faced by everyone, including retail chains, banks, entertainment companies, and even government organizations. As these threats grow, many organizations are asking what is cyber insurance and how it can help protect them. Cyber insurance provides financial protection against losses resulting from cyberattacks, helping businesses manage the costs of recovery, legal liabilities, and reputational damage.
However, it is not just big companies that are susceptible to being hacked or getting a virus. Even small businesses are facing a huge challenge in data theft. Around 55% of small companies have been facing data theft and around 53% of companies have faced data theft issues multiple times.
An information theft or breach can harm something beyond the company PC network. Thus, “Cyber Insurance” comes into the picture. It is a precaution for any kind of business.
Digital Protection
Digital protection by and large covers the liability of a business that is caused by data breach or theft, including confidential client data such as Social Security numbers, credit card numbers, account numbers, driver’s license numbers, and medical records. Many businesses are now asking what does cyber insurance cover to better understand how it can help mitigate these risks. Typically, cyber insurance covers costs related to data recovery, legal fees, notification of affected individuals, regulatory fines, and even public relations efforts to manage reputational damage.
General Insurance Cover
General insurance covers bodily wounds and property damage resulting from the items, operations, or services. Normally General insurance doesn’t include Cyber insurance coverage.
Cyber Insurance Coverage
Normally, Cyber insurance coverages include the following:
- Expenses related to Legal including legal fees.
- Restoring personal information of the customer.
- Recover compromised information.
- Repairing damaged devices and computers.
Most countries expect organizations to inform clients about a data breach/theft including personally identifiable information, a process that can be exceptionally costly.
Digital Protection Offered by Different Cyber Insurance Providers
Some of the Cyber insurance policies offered by different companies are,
- Data compromise protection Insurance: It normally includes credit monitoring and services provided by a PR firm.
- Identity recovery protection Insurance: It helps victims of identity fraud to restore their credit history.
- Insurance for Virus affected loss: It protects the business against damages that are caused by a virus or a computer attack. It also helps with the cost of restoring and recreating data.
Need for Cyber Insurance Coverage
In short, every serious business should have their data-related risks covered by cyber insurance, which can provide critical support during breaches and help enhance their reputation in the market. One common question that arises is how much cyber insurance do I need, as coverage amounts can vary depending on the size of the business, the type of data handled, and the level of risk exposure. Assessing your specific needs with a qualified expert is essential to ensure adequate protection.
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