You have property insurance to protect your company’s physical assets and unemployment insurance to cover your employees – what do you have to protect your digital resources? Cyber insurance is a safeguard that protects your business from cyber risks such as a data breach, cybercrime, or cyber attack. Continue reading to learn more about what this type of insurance covers and if it is suitable for your small business
What Does Cyber Insurance Cover?
Most companies must invest in general liability insurance, which covers many things, such as bodily injury and property damage. But this type of insurance has coverage exclusions, one of which is protecting your company’s liability as a direct result of a data breach.
Cyber insurance offers businesses financial protection following a data breach by covering the cost of:
- Notifying customers of the data breach.
- Recovering sensitive information and intellectual property that has been compromised.
- Repairing physical damage to computer systems and hardware.
- Restoring personal and sensitive information of affected customers.
The two largest costs associated with a cyberattack are the legal fees and the process of notifying users that their customer information has been compromised. Depending on your state, you may be required to provide affected customers with free credit monitoring. While not needed for all areas, offering this service is seen as a goodwill gesture that will help improve your public image following a cyber event.
Your provider can customize cyber insurance plans to fit the unique needs of your large or small business.
What is the Cost of a Data Breach?
IBM and the Ponemon Institute issue a yearly data breach report. According to the 2021 report, the cost of a data breach has gone up 20% since 2019 to a whopping $4.24 million. This cost estimate considers several factors, including legal fees, regulatory fines, technical activities, loss of brand equity, business interruption, customer turnover, and decreased employee productivity.
A data breach can damage your company’s reputation, employee morale, and trust in your data integrity.
Cyber insurance can help offset these costs by covering many of these financial losses.
Cyber Insurance vs. Cybersecurity
Cyber and data security programs and technology such as antivirus software, firewalls, recovery software, and cloud-based backup systems protect your organization’s digital data and sensitive information. This includes customer information, credit card numbers, intellectual property, social security numbers of your employees, and so much more. Once a hacker gets ahold of this information, there is no telling the damage they can do.
In the event of a data breach, system failure, cyberattack, or the presence of any unwanted or unauthorized users, cyber insurance helps policyholders mitigate the cost.
How Do You Get Cyber Insurance?
Before issuing a policy, your insurance provider will complete a detailed review of your company’s current cyber security setup. Suppose your IT specialist put strong data security measures and risk management solutions. In that case, your small business will usually be offered higher levels of cyber insurance coverage at a better price point.
Like all insurance, which varies by demand, the cost of cyber insurance coverage is based partly on the frequency, severity, and cost of cyberattacks, which unfortunately have all been increasing.
Insurance companies offer various levels of cyber insurance. There are typically three types of services and liability policies your company can select from, with many small businesses opting for all three.
How Do You Prepare for Cyber Insurance?
Before your company implements a cyber insurance policy, it is important to properly prepare your network and train your employees. This will help ensure that you reap the most benefits from your policy.
Do a Network Assessment
First, you’ll need to do a network assessment. The assessment will show all of the existing connections from your network to the Internet through firewalls, as well as any overall maintenance that has been done to the network. A network assessment can show scenarios such as former employees whose accounts are still registered or any open ports in the firewall. It can also show monitoring of network traffic and other items.
The network assessment will be a valuable asset that you can show to the insurance company when creating the terms of your policy.
Implement Multi-Factor Authentication
Good security is key. Implementing multi-factor authentication across your organization can greatly help increase security and decrease the risk of data breaches or a cyber attack. Therefore, as you prepare for cyber insurance, be sure to set up multi-factor authentication for every employee.
Arrange Employee Training
Of course, implementing cyber security measures are only good if people understand and follow them. Therefore, a big step to prepare for cyber insurance is to set aside time for an employee training session. This session should focus on training employees to recognize risks such as dangerous links and phishing attempts.
This service protects your business against damage caused by a malware attack, outage, phishing scheme, or ransomware attack. Cyber liability coverage helps offset the cost of restoring or recreating your company’s lost data.
Identity Recovery Protection
This service protects your business against the financial burden of helping your customers who had their identity stolen during the security breach to restore their credit history.
Data Compromise Protection
This service offers credit monitoring to your customers and gives access to services available at a public relations firm.
Cyber Insurance that Works for You
The IT professionals at STEADfast IT are here to help you keep your personal and professional data safe online with our proactive approach to cyber security. While we understand the importance of protecting your data, we are also proponents of planning for the unexpected. In the unlikely event of a cyber-attack or data breach, cyber insurance can help prevent a business interruption by covering the cost of the security breach.
If you’d like help choosing the right insurance provider or selecting the level of cyber insurance coverage your company needs, our team can help you find what fits your unique needs. Contact us to set up a free, no-pressure consultation with one of our remote IT specialists.