Most modern businesses have an online presence; many store client data and personal information on their internal IT systems. Although having your customers’ data available at the touch of a button is undoubtedly convenient and necessary, it can expose you to cybercrime risk.
A cyber attack is devastating, not only financially and to your reputation, but it can also leave you wide open to legal implications and large fines that are sometimes irrecoverable. For that reason, cyber insurance is an absolute must for any business, large or small.
So, what is cyber insurance, what does it cover and how much cyber insurance coverage does your business need?
What does cyber insurance include?
Cyber insurance is a type of insurance policy designed to protect businesses from financial losses and liabilities associated with cyber incidents and threats. The specific coverage included in a policy can vary widely, depending on the insurance provider and the policy itself.
However, a cyber insurance policy usually includes some common elements, including the following:
- Data breach coverage
- Cyber extortion coverage
- Business interruption coverage
- Legal and regulatory expenses
- Public relations and reputation managementForensic investigation
- Third-party liability
- Intellectual property protection
- Social engineering fraud coverage
- Computer virus and malware coverage
It’s important to understand that insurance providers’ coverage and policy limits vary significantly. You should carefully review what your business needs regarding cyber insurance coverage with an expert insurance advisor, such as our team here at Stanmore Insurance.
What does cyber insurance actually pay for?
The specific terms and coverage of a cyber insurance policy vary, depending on the provider and the policy itself, but here are some common expenses that cyber insurance might pay for.
Data Breach Response Costs
- Notification Costs: The cost of informing anyone affected by the data breach, including regulators, customers and other relevant parties.
- Forensic Investigation: Expenses related to finding out what caused the breach and assessing its scope.
- Legal Fees: Costs associated with hiring lawyers to handle the legal implications of a data breach.
Data Loss and Restoration
- Costs related to recovering stolen or lost data.
- Expenses incurred to recover and restore data.
Cyber Extortion
- Ransomware Payments: Coverage to pay a ransom to cybercriminals who have encrypted your business data and demand payment for its release.
Business Interruption
- Loss of income and any expenses resulting from a cyber attack that disrupts your business operations.
Reputation Management
- Any costs associated with managing reputational damage and public relations caused by the data breach.
Regulatory Fines and Legal Penalties
- Coverage for any penalties and fines imposed by regulatory authorities for cyber security standards or non-compliance with data protection laws.
Legal Liabilities
- Costs and settlements related to lawsuits from affected parties, such as business partners or customers.
Network Security and Privacy Liability
- Coverage for liability resulting from a breach of network security or data privacy.
Social Engineering Fraud
- Protection against scams in which employees are tricked into transferring sensitive information or clients’ money.
Unauthorised Access or Insider Threats
- Coverage for incidents involving external hackers or malicious employees.
Who needs Cyber Insurance?
According to 2023 Cyber Security Breaches Survey statistics, 24% of charities and 32% of UK businesses have suffered cyber attacks or security breaches.
Those stats are even higher for large organisations (69%), medium businesses (59%) and high-income charities (56%). Those are pretty high odds!
So, if you are a business owner, trade online, use email, store customer data or have a social media presence, you probably need cyber insurance.
What amount of cyber insurance does my business need?
The amount of cyber insurance your business needs depends on your industry, business and the type of customer data and personal information you handle. The first thing to do is consider your risk profile, i.e., what damage you would face if you suffered a cyber attack.
For example, if you handle sensitive personal data, like financial information, the damage caused by a data breach will be significant. In contrast, the risk will be much lower if your business processes customer contact details and names. In that scenario, cybercriminals could still misuse the data, but it would cause less catastrophic damage.
When working out their premium, insurance providers consider your business risk profile and the likelihood of a data breach. Generally, insurers offer better premiums to businesses that are data savvy and have taken steps to mitigate the risk of a cyber attack.
The best thing to do is discuss your potential business liability with a cyber insurance professional who will help determine what coverage you need and tell you how much that will cost.
Questions cyber insurers will ask about your business
When calculating cyber insurance premiums, insurance underwriters assess a business’s risk profile and might ask you the following questions:
- What online security measures do you have in place, such as firewalls, encryption and intrusion detection systems?
- What measures have been implemented to protect and secure sensitive data, like financial information, customer data and employee records?
- Does your business have a tried and tested incident response program in place that enables you to handle a cyber attack effectively?
- How quickly can your business resume normal operation following a cyber attack?
- Do you have cyber security training for all new employees to mitigate staff-related risks?
- Does your business comply with industry-specific cyber security regulations and best practices?
You should be able to answer all those questions when discussing cyber insurance policies with an advisor.
Stanmore Insurance for Cyber Protection
For that reason, if your business has an online presence or stores customer and supplier data online, you must have a cyber insurance policy. Call our experienced, expert advisors to discuss your business’s cyber insurance requirements today.