When it comes to cyber insurance coverage, one critical element of your policy you should consider is business interruption insurance (or business income insurance). Business interruption insurance protects your business from the financial losses you could incur if you cannot continue operating normally following a cyber attack.
We explore below what business income insurance covers, how it works and whether this component of a cyber insurance policy is a worthwhile business investment for you.
What does business interruption insurance cover?
The business interruption insurance element of your cyber insurance coverage protects you from any financial losses your business suffers if it is unable to operate as usual because of a cyber attack. These attacks can include DDoS (distributed denial-of-service) attacks, ransomware, data breaches and other forms of cyber-criminal activity.
How does interruption insurance work for businesses?
Business interruption coverage is typically included as part of a broader cyber insurance policy.
While the cyber insurance policy addresses the costs of investigating and recovering from a cyber attack or data breach, the business interruption element covers financial losses resulting from disruption to your normal operations.
When a business interruption claim is filed, the insurer assesses the impact on your operations. This may involve reviewing financial records to determine your average income and expenditure, as well as the revenue you would have earned if the disruption had not occurred.
Once the claim is approved, the insurer compensates you for lost income and additional expenses incurred during the interruption, up to the policy limits.
Types of business interruption insurance
Cyber insurance policies can include several types of business interruption coverage, such as:
Gross revenue coverage
This type of business interruption insurance covers you for loss of income due to the disruption to your business operations following a cyber attack.
Profits coverage
This coverage is designed to protect your business from the loss of net income following an interruption to your business operations after a cyber attack once you’ve deducted any ongoing expenses.
Extra expense coverage
An extra expense policy covers additional costs your business may incur to reduce the impact of a disruption caused by a cyber attack. This can include hiring IT contractors to restore systems, running a PR campaign to reassure customers, or renting temporary equipment.
Is business interruption insurance worth it?
Whether business interruption insurance within a cyber insurance policy is worth the extra cost depends on the nature of your business and the risks you face from cybercriminals. If your business relies heavily on an online presence to generate income, for example, an e-commerce website or online service provider, any significant online disruption could be financially devastating. In this case, business interruption insurance gives you invaluable protection against such risks, keeping your business running even following an unexpected cyber attack.
That said, this form of insurance can also be essential for companies that mostly operate offline since a cyber attack can still have a significant financial impact on your business if it prevents your normal operations.
Business Interruption Cover with Stanmore Insurance
Cyber attacks are becoming an increasingly common form of criminal activity, and their financial impact can be severe for businesses of all sizes. The business interruption component of a cyber insurance policy helps ensure your operations continue with minimal disruption to customers and cash flow. For coverage, call our professional team of experienced advisors at Stanmore Insurance to learn more.