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What Is Cyber Insurance and Does My Business Need It?

Cyber-attacks are not a new phenomenon, but they are, unfortunately, on the rise. A cyber-attack on your business can be utterly detrimental, leaving computers and computer networks exposed, disabled, and even destroyed.

Due to the rise in cyber-attacks, cyber insurance (also referred to as cyber risk or cyber liability insurance) has become a hot topic in recent years, and it makes sense as it’s always better to prevent a cyber disaster than deal with the consequences. Cyber insurance pretty much does what it says on the tin; it’s a type of insurance for businesses that’s put in place for digital threats. With so many cyber threats affecting businesses, no wonder it has become a highly popular service for SMEs and businesses, large and small around the globe.

Should My Business Have Cyber Insurance?

In a nutshell, yes. Your business more than likely should have cyber insurance in place. However, it’s important to understand what it does and doesn’t cover.

What are the Benefits of Cyber Insurance?

As technology continues to become increasingly important for a business to operate successfully, the value and need of a robust cyber-insurance policy will continue to rise. No matter the size of your business, its location or industry, the technological nature of the modern-day world exposes vulnerable businesses to cyber-threats every single day.

A cyber-attack will not only threaten your finances and disrupt your operations, but it can also tarnish the reputation of your business. In order to protect your business from the devastating effects of a cyber-attack, it’s essential that you protect yourself with a strong cyber-insurance policy that covers all grounds.

10 of the most significant benefits of taking out cyber insurance are, but not limited to:

  1. Forensic support – When you have cyber insurance in place, forensic support provides your business with near-immediate around the clock support from cyber specialists following a data breach or hack. They will be able to confirm the impact of the breach and establish solutions.
  2. Consultancy fees – Your insurer may reimburse any costs of a consultant that has helped manage a response or solution to the incident.
  3. Interruption of business – If your business experiences an IT failure or cyber-attack that disrupts the operations of the business, your insurer may cover your loss of income during the interruption. In addition, increased costs to your business operations in the aftermath of a cyber-attack may also be covered.
  4. Privacy breach costs – A breach costs clause is a single clause that provides cover for security breach costs, such as notifying customers or recovering files.
  5. Privacy liability clause – A privacy liability clause provides cover for privacy infringement claims plus any legal costs in the event of a cyber breach. This is critical for all businesses that handle or store personal information in line with GDPR.
  6. Cyber extortion – A policy may cover your business if it’s infected by ransomware or other malicious software that attempts to seize control of or withhold access to operational or personal data until a ransom or fee is paid.
  7. Digital asset replacement expenses – In the event that your business’ digital assets are corrupted, lost, or altered in any way by a cyber-criminal, your policy may cover the costs incurred.
  8. Reputational damage – Your policy may recover lost profits directly attributable to cyber-attacks. Particularly those that have been detrimental to the reputation of the business and/or any of its employees.
  9. Management liability – Your policy may cover costs associated with defending senior management from cyber-attack fallout.
  10. Restoring data – After a massive security breach, your insurer can help to cover costs for restoring vital business data.

While there are many benefits to having cyber insurance in place, it’s equally important to understand what’s not included. For instance, if you’re using outdated or unsupported software or systems, many cyber insurance policies will not cover you.

Examples of this are using end of life operating systems such as Windows 7 or end of life equipment such as a Firewall that is no longer receiving firmware or security updates. However, when you do choose to take out cyber insurance, speak with the insurer about the terms and conditions and what potential breaches could affect your policy.

How Much Should I Expect to Pay for Cyber Insurance?

First and foremost, when it comes to buying the right cyber insurance for your business, what’s important to understand is what your business’ assets are worth. An example of an asset could be a laptop, workstation, server or database, and, more importantly, the information or data that it contains.

In most cases, a robust cyber insurance policy will cost in the region of £1000 per year. It’s also important to invest in training employees to recognise and react at the first signs of cyber compromise. Often, cyber insurance can create a false sense of security, so splitting your budget between a robust cyber security policy and trained and knowledgeable staff can strike the perfect balance.

Something to remember is that once you’ve taken out an insurance policy, you shouldn’t just leave it and get on with things. Your cyber insurance policy should be reviewed regularly and updated based on the continually evolving needs and current cyber-threat dangers directly related to your business. Above all, invest your budget wisely with a certain per cent in preventive controls with the leftover percentage invested in insurance.

What Level of Cover Do I Need?

The insurance policy requirements of every single business will differ based on a number of factors. But a good starting point would be to speak with different insurers to see what they can offer you. Things to consider include, but are not limited to:

  • The amount of sensitive information stored
  • Where sensitive or confidential information is stored
  • What measures would need to be taken if your business experienced a data breach
  • What the costs would be to replace the damaged software/hardware
  • Does your business have trained employees to mitigate the damage?
  • Does your business require the assistance of external security specialists?
  • Does your business have PR staff to deal with crisis management if a data breach occurred?

Answering the above questions and gathering as much information about your business as possible will help you get an idea of how much insurance coverage your business may require.

How to Pick the Right Insurance Provider?

It’s essential to shop around and speak to different providers, understanding what each can offer your business in times of crises. Word of mouth is the strongest form of marketing, so it may also be beneficial to speak with other industry professionals for recommendations.

At Cyan, we’ve got a great track record of helping small and medium-size businesses put the right cyber security measures in place. We can work with you to develop a strong cyber security policy document that will act as a protective umbrella for your business. We can also help audit and review any policy that you may already have in place to ensure that it is fit for purpose. Contact our expert team today to find out more.

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