Cyber-insurance is a specialty lines insurance product intended to protect businesses, and individuals providing services for such businesses, from Internet-based risks, and more generally from risks relating to information technology infrastructure, information privacy, information governance liability, and activities related thereto.
“The formal definition of cyber insurance is essentially a contract between an insurer and a company to protect against losses that are related to computer- or network-based incidents,” explains Juergen Weiss, head of global financial services research and advisory at tech analyst Gartner.
What Does Cyber Insurance Cover?
In the event of a cyberattack, most cyber insurance policies will cover the first-party and third-party financial and reputational costs if data or electronic systems have been lost, damaged, stolen, or corrupted.
For the business involved – the first-party — cover includes the cost of investigating a cybercrime, recovering data lost in a security breach and the restoration of computer systems, loss of income incurred by a business shutdown, reputation management, extortion payments demanded by hackers, and notification costs, in the case you are required to notify third parties affected.
Third-party coverages (that result from claims against you) include damages and settlements, and the cost of legally defending yourself against claims of a GDPR breach.
Who Needs Cyber Insurance?
If your business uses, sends, or stores electronic data, you may benefit from cyber insurance. That data, whether it belongs to the business or is sensitive customer information, is vulnerable to cyber-attacks and data breaches; cyber insurance can help with the cost of recovery.
How Much Does Cyber Insurance Cost?
The cost of cyber insurance depends upon several factors, including the business’ annual revenue, the industry it functions within, the type of data held, and the level of network security. Certain sectors are more vulnerable to cybercrime and will therefore require a higher level of coverage.
What Are Common Cybercrimes?
Unfortunately, even some of the most tech-savvy individuals can fall victim to cybercrime. While there are numerous types of criminal activities occurring online, there are a few common cybercrimes to be aware of:
- Identity theft, fraud, extortion
- Malware, phishing, spamming, spoofing, spyware, trojans, ransomware, and viruses
- Stolen hardware, such as laptops or mobile devices
- Denial-of-service and distributed denial-of-service attacks
- Breach of access
- Password sniffing
- System infiltration
- Website defacement
Cyber insurance is increasingly becoming a top-of-mind consideration for businesses. Customizing a policy that fits your needs can help you manage any financial burdens that arise if your company experiences a cyber-attack or data breach.
