Everything You Need to Know About Cyber Liability Insurance
However, few universal standards on cyber liability coverage are in place. As a result, the coverage offered in these policies varies significantly. This makes it difficult to understand your options and protect yourself from the financial impacts of a cyber-attack.
Still, as the threat of cyber-attacks evolves, liability insurance is a must-have for many companies. To help you decide how to address cyber threats to your business, we’re explaining what you need to know about cyber liability insurance.
What is Cyber Liability Insurance?
As mentioned, cyber liability insurance policies vary quite a bit. Some policies are for small businesses, while others are meant for large corporations.
Generally, cyber liability insurance covers costs associated with cyber-attacks that affect your customers’ data. This could include a range of data, from customers’ credit card information and Social Security numbers to their phone numbers and addresses.
Basic plans cover the costs of retrieving lost data and hiring a public relations firm. They also usually include monitoring services and breach notifications.
How Do Cyber Liability Insurance Plans Work?
The concept of cyber liability insurance is just like other types of insurance. You can buy a policy directly from a provider or go through a broker and you’ll pay a monthly premium for your policy. Like other forms of insurance, certain events will be covered, and other events won’t. For example, terrorist-related cyber-attacks are often excluded from many cyber insurance policies.
Perhaps the biggest difference with cyber liability insurance is the underwriting process that insurers go through. Since every business has different risk factors, your insurer will conduct a thorough assessment of your business’s risk level to quote a price for your policy. For this reason, it’s important to have cyber-security policies in place before shopping for cyber liability insurance.
What Types of Businesses Need Cyber Insurance?
Cyber insurance policies can be expensive, but so can a cyber-attack. Some argue that any business that stores employee or customer information that could be used to identify an individual needs cyber insurance. It’s not a bad argument considering that cyber-attacks are on the rise, but the risk varies from company to company.
At the very least, it’s critical for any business that stores personally customer or employee information to conduct a cyber risk analysis. That way, you can make an informed decision about your insurance needs based on the level of risk and the potential legal, reputation, and operational costs of a cyber-attack.
What Are the Benefits?
Although cyber liability insurance isn’t necessarily a must-have for every single business, the benefits are undeniable. The primary benefit, of course, is that a cyber insurance policy enables you to transfer the financial risk of a cyber-attack to your insurer. Plus, the insurer’s underwriting process itself will help you find gaps in your cyber-security program.
Finally, since most policies include tools such as breach notifications and incident response assistance, you’ll have access to additional cyber risk mitigation tools.
Conclusion: Consider Your Business’s Cyber-Security
If you’re interested in a cyber insurance policy, it’s important to shop around. As with traditional insurance, there are plenty of cyber insurance providers including big names like AIG and smaller, exclusively security-focused providers such as Data Breach Insurance.
Regardless of the cyber insurance policy you purchase, remember that these policies aren’t a substitute for a robust cyber-security program. Treat cyber-security insurance as a supplement, not a replacement, for a broader cyber risk mitigation strategy. In addition to protecting yourself from risk, strong cyber-security will reduce the price of your cyber liability insurance policy.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.