How Cyber Insurance Can Protect Your Business This Year

Cyber attacks are on the rise and businesses of all sizes are at risk. Getting cyber insurance can help protect your company from the costs and consequences of a cyber attack. Here’s what you need to know about cyber insurance and why it matters this year:

What is Cyber Insurance?

Cyber insurance is a specialized insurance policy that helps protect businesses from losses caused by cyber attacks and data breaches. It typically covers:

• Costs for responding to a cyber attack, like hiring forensic investigators or IT security experts.
• Expenses for notifying customers of a data breach, providing credit monitoring services, or setting up call centers.
• Liabilities from lawsuits by customers or regulatory fines after a data breach.
• Losses due to business interruption from a cyber attack.
• Damages to data, software, and systems from malware, hacking, or human error.

Why Cyber Insurance Matters in 2022

Cyber attacks are becoming more frequent, sophisticated, and costly. Here’s why cyber insurance is especially important this year:

• Remote work increases risks. With more businesses operating remotely, cyber security risks have increased. Cyber insurance can help cover these new exposure areas.

• Attacks are growing in frequency and impact. The number of cyber attacks grew significantly in 2021, with the average cost of a data breach reaching $4.24 million.

• Regulations are expanding. More government regulations around cyber security and data privacy are being enacted globally, with large fines for non-compliance.

• Lawsuits are rising. Class action lawsuits following breaches are increasing, along with lawsuits from business partners impacted by an attack.

• Reputational damage can be severe. The fallout from cyber attacks can severely damage brand reputation and customer trust.

Key Cyber Insurance Considerations

Cyber insurance policies and coverage can vary widely among providers. Here are some key factors to consider:

• Coverage scope – Make sure the policy covers first- and third-party costs from common cyber events.

• Policy limits – Insure damages up to the full extent of potential business losses.

• Exclusions – Avoid policies with broad exclusions that substantially limit coverage.

• Worldwide coverage – Seek worldwide coverage for global businesses.

• Incident response services – Look for policies that provide access to forensic experts, PR specialists, and legal counsel.

• Reputation services – Opt for plans that help restore brand reputation after an attack.

• PCI fines – Ensure fines for non-compliance with PCI data standards are covered.

Steps to Getting Covered

Follow these best practices when getting cyber insurance:

• Document your IT security controls, processes, and protocols. More robust cyber security practices can lower premiums.

• Calculate your cyber risk exposure by assessing the value of your data assets and possible legal liabilities after a breach.

• Research carriers and policies to find the best fit coverage for your business. Compare premiums, deductibles, and policy limits.

• Work with a broker or agent experienced in cyber policies to structure optimal coverage.

• Read policy documents carefully to understand covered events, exclusions, and notification requirements.

The Bottom Line

With cyber threats increasing, cyber insurance can be a prudent investment to mitigate risks and losses for any business. Taking time to secure the right policy with comprehensive coverage this year can save considerable costs down the road if your business suffers a cyber attack.