Cyberattacks leading to data breaches have become prevalent in the past few years. That’s why many companies from various industries have started investing in ways that can protect themselves from liability. One such approach is cyber security insurance.
Cyber security insurance aids enterprises by minimizing their digital liability while mitigating risks that are associated with online threats and data breaches. This type of insurance covers malware attacks, viruses, digital extortion, website hacks, and more.
Yet despite the benefits that cyber security insurance offers, there are still many organizations that fail to leverage this form of cyber protection.
Consequences of Not Having Cyber Security Insurance
With the growing threat of hacking and malicious threats, many are wondering whether they should invest in cyber security insurance or not. To help with this decision, consider the following consequences of not having the right coverage for your company:
- You won’t have the coverage to settle any legal expenses. Companies that suffer damages because of a cyber attack can’t benefit from the assistance cyber insurance offers to cover legal costs.
- You don’t have access to backup funds that can be used for crisis management in situations where an attack has resulted in major issues for your organization. These crisis management solutions can be quite useful in helping prevent your status from deteriorating further.
- You won’t receive additional funds to help cover regulatory fines and penalties in case a cyber attack leads to financial loss.
- Most general liability policies don’t provide coverage for damage caused by cyber threats such as ransomware and virus, unlike what cyber security insurance has to off
These are the main reasons why companies today need to have cyber security insurance included in their business continuity strategy. When you have cyber insurance, you’ll be able to recover faster after an incident compared to not having one.
What Does Cyber Security Insurance Cover?
The following are the key areas that cyber security insurance covers:
- Defense expenses: In case a malicious individual attacks your network or website for reasons such as ransomware, then your insurance policy company will help by covering the recovery costs for the said attack.
- Third-party indemnification: In this type of coverage, your insurer will be responsible for paying victims on your behalf in case a hacker successfully steals your data or if malware causes damages to your network.
- Network security audit coverage: This type of coverage takes care of software issues that are identified during an audit. This can include the need to patch and update systems that experts believe hackers could easily exploit.
- Remediation assistance: This coverage is when the insurer handles all legal fees that are associated with managing digital threats and getting back lost funds. It can also include recovering from reputational damage caused by bad cyber security practices.
Which Businesses Can Benefit From Cyber Security Insurance?
Any business that places a significant investment in their information technology network or constantly transmits important data through the internet needs cyber security insurance. This includes enterprises that have major investments in IT infrastructure including hardware, software, and support solutions.
Companies that regularly manage the confidential information of their employees, business partners, and customers should also seek appropriate digital security insurance. This is especially true for those that hold or process healthcare, consumer, financial, or other sensitive information in electronic format through networks and systems.
In case a breach happens, businesses that are affected would want to have a third-party provider help cover the expenses they would otherwise shoulder. Companies that depend heavily on their IT infrastructure for daily operations should also ensure they have cyber security insurance. This is because any downtime that happens could result in lost business and revenue.
Should Businesses Invest in Cyber Security Insurance?
Seeing as how cybercriminals and their exploits are running rampant these days, it’s only wise for companies to invest in an approach that can provide coverage for them in case of a breach. This is especially true for businesses that heavily rely on digital content.
Security needs to be a top priority for modern organizations but it can be costly to maintain. When you have a cyber security insurance policy in place, you can help safeguard your enterprise from attacks that could prove costly in the long run.
In case your company experiences a data breach, paying out of pocket for backup solutions and restoration services is more expensive than getting a cyber insurance policy beforehand. Furthermore, many cyber security insurers will protect companies against losses caused by data breaches, something general business liability policies normally do not cover.
Today, countless businesses heavily rely on their computer infrastructure to carry out important functions. That’s why having some form of cyber security insurance at the ready is crucial.
Companies that fail to secure a cyber security insurance policy ahead of time will be forced to spend their own money to cover significant losses that can happen after an attack. Smart business owners invest in these policies to make sure that any losses they incur due to a data breach will be covered by a third party, allowing them to limit their overall financial exposure.
The cost of operating without cyber security insurance is high, particularly because companies will be left standing on their own when faced with the costs associated with a data breach. When you have a reputable insurer that can provide the appropriate cyber security coverage, you’ll have an outside party who’ll help shoulder the burden in case of a successful cyber attack.
At CloudZen, we’ve prepared a document that will help you further understand and prepare in case of a potential data breach. If you’re interested in learning more, download our cyber insurance checklist today.