Every business is vulnerable to cyber-attacks and data breaches. The costs associated with recovering from such events can be substantial, putting companies of all sizes at major financial risk. Fortunately, cyber insurance exists to protect against these electronic threats.
What is Cyber Insurance?
Cyber insurance is a specialized insurance product designed to help offset the costs and losses an organization can face following a cyber-attack or data breach. It works similarly to other insurance policies – you pay a monthly or annual premium in exchange for a pre-determined amount of coverage for specific cyber events and costs.
What Cyber Risks Does It Cover?
Cyber insurance covers a broad range of digital risks that could be disastrous for an uninsured business. Cyber insurance policies vary, but often cover expenses related to:
- Data destruction, corruption, or loss
- Business interruption following an attack
- Network damage and restoration
- Computer fraud or cyber theft of funds
- Public relations crisis management
- Legal costs and settlements
Who Needs Cyber Insurance?
If your business handles sensitive data or has significant digital assets, speak with an insurance advisor about cyber insurance. While all companies face some level of cyber risk today, cyber insurance tends to be most relevant for:
- Companies that store sensitive customer/employee data whether electronically or in filing cabinets
- Businesses with valuable intellectual property or trade secrets
- Organizations that rely heavily on IT systems and the internet. This also includes your mobile phone
- Businesses with limited resources to recover from an attack
What to Look for in a Policy
When evaluating cyber insurance options, be sure to review:
- Coverages – Make sure the policy covers the exposures most relevant to your business.
- Limits – Higher limits mean more protection when a major event occurs.
- Deductibles – How much you pay out-of-pocket before coverage kicks in.
- Add-ons – Extra coverage like cyber extortion services or PR assistance.
- Exclusions – Know what the policy doesn’t cover.
- Defense costs inside or outside the limits
- Is there a dedicated claims team specific to cyber incidents
Protecting your business from the growing risk of cyber-attacks starts with understanding cyber insurance. Use this introductory guide as a starting point when considering policies for your organization.
