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A cyber insurance policy can offset the costs of a cyber-related security breach or similar events.
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We guide you through the complexities of cyber insurance.
We know the ins-and-outs to the cyber insurance market and are here with the answers you need.
Cyber threats are constantly evolving and becoming more sophisticated. Keeping up with potential threats and protecting against them can be a full-time task. Given these circumstances, it’s no surprise the demand for cyber insurance has grown significantly over the past few years.
Cyber insurance reflects its native environment: between our evolving interactions with the digital landscape and the ever-increasing number of cybercrimes, it’s no wonder cyber insurance has become complicated and complex to navigate.
What is cyber insurance?
Cyber insurance is also known as cyber security insurance or cyber liability insurance. It is designed to help businesses and organizations decrease their exposure to digital risks by offsetting the potential costs involved with recovery from a cyber-related security breach or similar events.
Do I need cyber liability insurance?
Perhaps your business or organization doesn’t have a large online presence. In cases like these, it’s easy to doubt that you need cyber insurance. Remember though, not everything is as it first appears.
Every day, countless amounts of sensitive data—like email addresses, names, and bank information—are shared with businesses, vendors, companies, social media sites, and so on. If you rely on technology for any part of your day-to-day operations or have any record of sensitive data, cyber liability insurance is strongly recommended. As reliance on technology increases, the risk of cyber-attacks does as well.
What does cyber insurance cover?
The form and function of cyber liability insurance varies among different types of policies. Ultimately, cyber insurance coverage depends on the cyber safety needs of your business. However, they typically include several key components, such as:
Data Breach Protection
Helps businesses recover from financial losses due to a data breach. This can include losses from data destruction, hacking, data theft, or data extortion.
Liability Coverage
Protects against claims by third parties for damages resulting from a cyber incident, including data breaches involving sensitive customer information.
Business Interruption
Can cover loss of income and related costs due to disruption/shutdown in business operations. This can include loss from unauthorized access or use of a computer system, transmission of malicious code or virus, or a denial-of-service attack.
Legal Expenses
Provides a financial shield against the costs of prospective lawsuits, credit monitoring services, legal fees, regulatory fines, and penalties that may arise from lawsuits or governmental actions related to the breach.
Ransomware Payments
Coverage for costs related to ransomware demands or other cyber extortion tactics, including negotiation services and the payment of ransom, where legally permissible.
Incident Response and Investigation
Covers costs associated with the immediate response to a cyber incident, including forensic investigation, crisis management, and public relations efforts to manage the fallout from a breach.
How much does cyber security insurance cost?
The cost of cyber insurance can vary widely depending on several factors. Typically, premiums are determined based on a range of criteria, including the following:
Business Size and Complexity: Larger businesses or those with complex operations often face higher premiums due to the increased risk and potential for larger-scale incidents.
Industry: Businesses in industries that handle sensitive data—like healthcare, finance, and retail—may incur higher costs due to the higher risks associated with data breaches and regulatory compliance requirements.
Revenue: A company’s revenue can be a factor, with higher-revenue companies potentially facing higher premiums due to the larger impact a cyber incident could have on their operations.
Cybersecurity Practices: Companies with robust cybersecurity measures in place may qualify for lower premiums. Insurers often assess the company’s risk management practices, such as the use of firewalls, employee training programs, and incident response plans.
Coverage Limits and Deductibles: The amount of coverage and your chosen deductible will significantly affect your premium. Higher coverage limits and lower deductibles typically result in higher premiums.
Claim History: Businesses with a history of cyber incidents or claims may face higher premiums since insurance companies view them as a higher risk.
Can I lower my premium for cyber insurance?
Lowering your premiums for cyber insurance involves demonstrating to your insurance company that your business is actively managing and mitigating cyber risks.
Insurers assess the risk of insuring a business based on the likelihood of a cyber incident occurring and the potential severity of such an incident. By proactively addressing these concerns, businesses can not only enhance their overall cybersecurity but also potentially qualify for lower insurance premiums. Here are several strategies to consider:
Improve General Cybersecurity Measures
Implement robust cybersecurity practices such as firewalls, antivirus software, intrusion detection systems, and secure Wi-Fi networks. Regularly update and patch systems to protect against vulnerabilities.
Follow Strong Password Policies
Consider implementing complexity and length requirements for passwords and implement password rotation policies. Encouraging or requiring the use of password managers can help employees maintain unique, complex passwords for different services without the worry of forgetting them.
Require Frequent Employee Training
Provide ongoing cybersecurity awareness training for employees to recognize and respond to cyber threats like phishing, social engineering, and malware attacks.
Encrypt and Back Up Data Regularly
Encrypt sensitive data both at rest and in transit.
Navigating the challenges of finding cyber insurance.
Unfortunately, with the recent increase in the number and severity of cyber-attacks, finding and qualifying for cyber insurance has become more difficult. Insurance companies have become more selective when offering cyber insurance policies and will often require applicants to complete a cyber risk assessment.
As part of this assessment, you may be asked about your existing cybersecurity efforts. More and more regularly, insurance companies have a number of cybersecurity requirements, including:
MFA (multi-factor authentication)
MFA adds an additional layer of security by requiring two or more verification factors to gain access to a system, application, or online account, significantly reducing the risk of unauthorized access. This has become a basic standard in many workplaces across the world.
Current Incident Response Plan
Maintain a regularly updated incident response plan, detailing how the organization will respond to a cyber incident, including roles and responsibilities, communication protocols, and recovery steps.
Separate Backups
Insurance companies want to know you’re prepared for the worst. Having two or more backups—separate from your digital work environment—tells potential insurance providers you’re dedicated to digital safety. This can make you a more appealing client.
Vulnerability Management
Establish a regular process for applying security patches and updates to software and systems to protect against known vulnerabilities.
How do I find the right cyber insurance provider?
Finding the right cyber insurance provider requires careful assessment and research. At Leavitt Select Insurance Services, we can support you in this process in a variety of ways, including:
- Evaluating your specific cyber risks and insurance needs.
- Researching reputable insurance providers that specialize in cyber insurance, considering factors such as experience and financial stability.
- Assessing coverage options to ensure they align with your needs, paying attentionto policy limits, exclusions, and additional services offered.
At Leavitt Select Insurance Services, we have multiple agents on staff, ready to help you find comprehensive coverage and support to mitigate your cyber risks effectively. Contact us today!