Cybersecurity insurance provides businesses with financial protection against the various types of losses that can be caused by a cyber incident, such as data breaches and theft. This type of coverage can be useful for small businesses that keep sensitive information on a computer or online, as financial losses due to cyber-attacks can well exceed $20k.
Types of Cybersecurity Insurance
Generally, cybersecurity insurance comes in two types of coverage: liability and first-party. First-party coverage can help a business recover from its financial losses. Typically, a cyber insurance policy can cover various types of activities related to a cyber incident, even including the investigation and assessment of the incident. It can also provide financial assistance to help a company recover from its financial losses, and it can provide anti-fraud services. Some policies will cover the costs associated with the repairs of damaged systems.
If your customers’ information has been compromised due to a cyberattack on your company, you might be held liable for the damages caused by this incident. Liability coverage can help a business recover from a third-party lawsuit brought against it. It can provide a variety of financial benefits, such as court fees and settlements.
What Types of Businesses Should Invest in Cybersecurity Insurance?
If your company stores private data such as credit card numbers or social security numbers on a computer or online, you might be at risk of a cyberattack. Cybersecurity insurance can be beneficial for businesses of any size that keep this information. Besides having first-party coverage, companies that maintain their own data should also consider additional policies.
One of the most common types of losses that a business can suffer due to a cyberattack is the loss of its financial records, as it can’t pay the ransom due to the attack. With first-party coverage, an insurance company can help the company respond in these situations without taking a significant financial loss.
For businesses that deal with other companies’ data, cybersecurity insurance can be beneficial. Having this type of insurance can also help cover the fines that a business might be issued following a data breach.
How to Get Cybersecurity Insurance
Unlike other types of insurance, cybersecurity insurance is not considered part of the traditional business insurance policies. It can be purchased through various providers, and some even provide endorsements that can be bundled with a business’s existing policies in order to help them get the coverage they need.
Although different risks and needs dictate the type of insurance that a business should purchase, an insurance agent can help them determine the right level of coverage for their company in case of a cyber attack.