A claim under cyber insurance may cover a number of costs, liabilities and losses associated with the cyber incident in question.
Firstly, if you suffer an attack, it’s likely you and your business will incur your own costs as a result of the event. For example, costs to obtain advice and support; costs to identify the source and scope of the attack; restore your systems; recover your data and notify victims of privacy breaches. All of these are known as ‘first party losses’, and include costs to get your business back up and running. Remember though, not all costs are covered under cyber insurance; for example, salary costs for employees, damage to property other than computer hardware, internet or utility outages .and uninsurable fines.
If your business experiences a cyber attack, it may also cause financial loss to third parties you deal with, such as clients and/or suppliers. For example, if you transmit a computer virus to a third party or disclose confidential information, that third party may suffer their own losses. Cyber Insurance can help to cover your liability for these costs as well. This is called ‘third party liability’, and the losses incurred from this can be substantial.
Following a cyber attack, it can be tricky to work out what your next steps should be to minimise damage, so another important feature under Cyber Insurance is access to an incident response specialist. An incident manager’s role is to help coordinate the steps your business needs to take to recover from the cyber incident.
This can include:
- a forensic investigation of your computer systems
- obtaining legal advice
- responding to regulators if needed (for example if there has been a privacy breach)
- public relations support to help minimise reputational damage
- costs to secure your computer systems against a future cyber attack
If your business experiences a cyber attack, it may also cause financial loss to third parties you deal with, such as clients and/or suppliers.
FAQs
Cyber liability insurance is a type of business insurance coverage that offers financial protection in the event of an electronic data breach, cyberattack, or some other cybersecurity issue.
What is cyber insurance and why do you need it? ›
A cyber insurance policy helps an organization pay for any financial losses they may incur in the event of a cyberattack or data breach. It also helps them cover any costs related to the remediation process, such as paying for the investigation, crisis communication, legal services, and refunds to customers.
What is cybersecurity and why do companies need it? ›
Cyber security refers to a series of procedures, processes and techniques that helps businesses guard their crucial systems, valuable and confidential data etc.
Why do small businesses need cyber insurance? ›
This specialized insurance coverage helps businesses reduce the risk of major loss after an event caused by hackers, human error, or technical failure leading to security lapses. Cyber insurance policies can help manage a variety of threats, including: Cyber extortion and ransom demands. Email phishing.
Why is cybersecurity important for insurance companies? ›
Why is cybersecurity important for the insurance industry? Cybersecurity is paramount for the insurance industry because it deals with vast amounts of sensitive personal and financial data. Ensuring this data is secure not only builds trust with clients but also prevents potential financial losses from data breaches.
Which businesses need cyber insurance? ›
Nearly all businesses are at risk
If you depend on a computer, tablet, smartphone, or the internet to conduct business, you're exposed to cyber risks. Digital devices can be entry points for cybercriminals.
Why do we need cyber protection? ›
One single security breach can lead to exposing the personal information of millions of people. These breaches have a strong financial impact on the companies and also loss of the trust of customers. Hence, cyber security is very essential to protect businesses and individuals from spammers and cyber criminals.
Why is cybersecurity important for small businesses? ›
Cyber criminals consistently target businesses in an attempt to weaken our nation's supply chain, threaten our national security, and endanger the American way of life. Your small business may be at risk for cyber attacks that can cause damage in many ways, including: Identity Theft. Business Interruption.
Why does my business need cyber security? ›
Whether a company is thinking of adopting cloud computing or just using email and maintaining a website, cybersecurity should be a part of the plan. Theft of digital information has become the most commonly reported fraud, surpassing physical theft.
What are the main purposes of cyber security? ›
Cyber security is how individuals and organisations reduce the risk of cyber attack. Cyber security's core function is to protect the devices we all use (smartphones, laptops, tablets and computers), and the services we access - both online and at work - from theft or damage.
A cyber attack can be costly – the losses incurred from suffering one could mean that you'd have to go into debt to cover the cost of getting your business back up and running, or even shut your doors completely. Cyber Insurance mitigates risk by helping to pay the cost for your business to recover from an attack.
How much cyber insurance does a company need? ›
A data breach costs a business an average of $150 per lost or stolen record of customer PII. Most small businesses purchase a cyber liability insurance policy with a $1 million per-occurrence limit, a $1 million aggregate limit, and a $1,000 deductible.
What is the risk of no cyber insurance? ›
Loss or corruption of data. Business interruption. Multiple types of liability. Identity theft.
Why use cyber insurance? ›
Cyber liability coverage is important to protect businesses against the risk of cyber events, including those associated with terrorism. Cyber insurance can provide network security coverage and assist in the timely remediation of cyber attacks and incidents.
Why is cybersecurity so important for your organizations? ›
Cybersecurity is important because it protects all categories of data from theft and damage. This includes sensitive data, personally identifiable information (PII), protected health information (PHI), personal information, intellectual property, data, and governmental and industry information systems.
What do you need to know about cyber insurance? ›
Cyber insurance generally covers your business' liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver's license numbers and health records.
Why take out cyber insurance? ›
Cyber insurance covers the liability actions that might be brought against you, arising out of a cyber event (third party loss), such as investigation and defence costs, civil damages, compensation payments to affected parties.
How do I know if I need cyber insurance? ›
If you own a business that collects or stores sensitive information, such as customer/supplier data or financial information, you may be at risk. Cyber insurance can help protect you from the financial consequences of a breach of these data and a disruption of your business.
Who needs cyber risk insurance? ›
While more important for companies with digital presences, any business with computers connected to the Internet is vulnerable to cyber risks such as malware/viruses, denial of service attacks and data/privacy breaches.
What is the purpose of cyber policies? ›
A cyber security policy provides guidance to an organization's employees on how to act to protect the company's sensitive information.
