Companies that store personal information or intellectual property face the risks of a cyber attack. Hackers execute complex cyber attacks that can block access to your servers or software, steal your data, or otherwise interrupt your business operations through a variety of schemes.
Cyber attacks can potentially cost your company thousands, or in some cases, millions of dollars. In fact, the average cost of a cyber attack was $4.24 million in 2021, representing a 17-year high.
Unfortunately, cyber attacks aren’t generally covered by a standard business insurance or errors and omissions policy, which leaves many companies to foot the bill themselves.
For 60% of small businesses, the cost of a cyber attack is enough to shut them down permanently. So how does a cyber security insurance policy help, and how can you find the best one for your business?
In this blog, we’ll take a closer look at cyber security insurance and why having a policy in place is essential for your business.
What is Cyber Security Insurance?
Cyber security insurance covers various costs associated with cyberattacks, such as:
- Legal fees (if applicable)
- Recovery of lost or corrupted data
- Notifying clients about data breaches
- Repairing or replacing lost, damaged, or compromised hardware
Similar to other types of insurance policies, there are different coverage options to explore, and understanding how each one protects your business is critical.
These policies vary significantly in price, generally ranging from $500 to $5,000 annually. Depending on the size of your business and the coverage you purchase, some cyber security insurance policies can potentially cost tens of thousands of dollars.
However, it’s important to note that this is still a relatively new form of insurance coverage – and as such, the cost of a cyber security insurance policy is also scaling quickly as insurance companies update their risk assessment protocols.
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Types of Cyber Security Insurance Coverage
When looking for cyber security insurance coverage for your business, here are some common policies often considered:
1.Cyber Liability Coverage
Cyber liability insurance covers the cost of communicating a breach and remediations for your customers. It also helps you cover:
- The cost of legal fees
- Settlements for class action lawsuits
- Costs associated with an investigation
Additionally, it should be noted that liability policies rarely offer first-party coverage.
2. Business Interruption Coverage
Business interruption insurance is a form of cyber security insurance that helps businesses recoup lost income associated with a cyber attack. In some cases, it can also cover the cost of increased operation fees incurred due to a cyber attack. It may also be worth noting that some policies may also consider reputational damage as part of the losses.
3. Forensic Analysis
Some cyber security insurance policies help cover the cost of an expert for data loss recovery. Additionally, forensic analysis coverage also helps organizations:
- Investigate the extent of a breach
- Prevent further losses
- Prepare evidence for a court case
4. Ransomware Payout
As ransomware attacks increase and become more complex, it’s vital to ensure your business has the right cyber insurance coverage in place. For instance, say your business is subject to a ransomware attack and is being extorted. With this policy, businesses can help meet extortion demands to minimize impact quickly.
5. Lost or Compromised Devices
In many cases, lost, stolen, or compromised devices can be replaced through your insurance policy with the proper coverage. Generally, this includes laptops, cell phones, or routers. These plans can also cover the cost of reprogramming or recovering devices to help them operate safely again.
Data breaches can also directly impact your clients’ confidence in your business, which can affect your bottom line for years to come.
So what’s the answer?
While cyber security insurance coverage can help minimize losses and maintain business continuity, it should be strengthened with robust cyber security measures. When improved, your business will stay better protected from new and emerging threats that may not be covered.
Looking for Cyber Security Insurance Coverage?
Get expert advice from TAG before you purchase a cyber security insurance policy.
Cyber Security Insurance Requirements
Like most business insurance policies, the cost and your eligibility for cyber security insurance coverage are determined by a risk assessment. Depending on the size of your business, the eligibility process may vary.
Most policies require you to equip your devices with anti-virus software, perform routine data backups, and use firewalls to protect your network. You will also need security protocols for data access and a secure authentication process with stringent password protocols. It’s also worth mentioning that recently, minimum requirements are increasing and sometimes requiring additional tools such as premium antivirus, event logging, MFA, etc.
Additionally, you may need to follow industry-specific standards to ensure your business is operating in accordance with regulatory compliance.
They may also expect you to track access to different assets and databases. Some companies may also perform routine assessments to ensure your business complies with the current standards.
Most cyber security insurance coverage won’t cover cyber attacks caused by employees, whether it’s through negligence or a deliberate attempt to steal data. Minimizing access to valuable data and employee training can help mitigate risks and should be part of every effective IT strategy.
Find the Right Cyber Security Insurance Policy With TAG
Cyber security insurance offers the peace of mind you need to ensure your business can withstand cyber attacks. Without an effective security strategy, you may not be able to afford the rates or even qualify for cyber security insurance coverage in the first place.
At Technology Advisory Group, we’ve offered simple solutions to complex problems for businesses across Rhode Island and New England for over 25 years. From planning to implementation to comprehensive employee training, our cybersecurity services protect your company from the latest cyber threats.
Our experts provide unrivaled cybersecurity services with 24/7 monitoring and routine, in-person server and computer system assessments that identify security vulnerabilities before they may be exploited.
For more information on how we can advise you with a cyber security insurance policy that suits your business’s needs, contact us today to schedule a consultation.