Is Cyber Insurance Important for Businesses?

Technology and internet use have many advantages for today’s businesses in all sectors. However, our growing use of tech has led to a new form of cybercrime.

Cybercriminals attack almost any kind of online system, including the following:

  • Websites
  • Social media
  • Accountancy or banking platforms
  • E-commerce stores
  • Customer Relationship Management (CRM) systems

If your business’s systems are attacked or hacked, it’s essential to have cyber insurance in place to get your business back on track with minimal losses and inconvenience to you and your customers.

Keep reading to learn why cyber insurance is absolutely critical for your business and to find out how the experts at Stanmore Insurance Brokers can help you choose the correct policy for your needs.

What is cyber insurance for businesses?

Cyber insurance for businesses is a form of insurance coverage that gives you financial protection against damage and loss resulting from cyber-attacks and systems hacking.

Why is cyber insurance important?

There are several reasons why having cyber insurance for your business is extremely important:

Financial protection

Cyber insurance gives businesses financial protection against the costs associated with cyber incidents. That can include network outages, data breaches, ransomware attacks and many other forms of cyber attacks.

Investigating cyber breaches can be incredibly expensive, and you could incur huge legal fees, regulatory fines, public relations efforts and the cost of notifying affected individuals. Cyber insurance can protect your business against those potentially crippling costs.

Risk transfer

Rather than your business bearing the entire financial risk associated with cyber incidents, cyber insurance allows you to share that risk with an insurance company.

Increasing risk of cyber threats

Cybercrime is becoming much more commonplace and sophisticated, and no business is immune to those threats, regardless of what sector the organisation operates in or its size. 

Cyber insurance helps businesses prepare for and manage cyber risks more effectively by developing incident response plans and implementing best practices.

Comprehensive coverage

All cyber insurance policies are designed to provide comprehensive coverage that goes well beyond that provided by general liability or property insurance. Cyber insurance policies address the unique risks and costs associated with cybercrime, including business interruption, cyber extortion, data breach response and legal liabilities.

So, with the right cyber insurance policy in place, you can get on with running your business with the peace of mind that you are fully protected financially, should the worst happen in an online capacity.

Legal and regulatory compliance

Many industries have particular regulatory and legal requirements regarding data protection and privacy. For example, GDPR imposes significant fines for non-compliance and loss of customers’ private information. 

Cyber insurance helps to meet these obligations by covering the costs of legal expenses and regulatory fines in case of a cyber breach.

Risk management

Insurance providers generally require a risk assessment before providing your business with a cyber insurance policy. That evaluation can identify vulnerabilities within your business operation, helping you to improve your cyber security measures and implement more robust risk management practices.

How cyber insurance protects your business

Cyber insurance policies can be tailored to offer exactly what coverage each business needs. However, as a general guide, a cyber insurance policy will cover the following critical areas:

Data breach response expenses

Data breach response expense cover includes protection against any costs your business incurs related to managing and investigating a data breach. That can include legal counsel, public relations efforts, forensic investigations, notifying affected customers and regulatory compliance.

Business interruption

Cyber attacks typically lead to business disruption and financial losses. Cyber insurance helps cover income losses and additional expenses incurred as a result of cybercrime, including restoring your systems and data.

Extortion and ransomware

Cyber insurance can cover any costs incurred through responding to ransomware attacks, including negotiation services, ransom payments and digital forensics that might be required to gauge the extent of the cyber attack.

Third-party liability

If a cyber attack results in your business being sued by your customers and third parties, a cyber insurance policy can cover all your legal expenses and any damages you might have to pay.

Network security and privacy liability

This insurance component covers the cost of defending any claims made against you that relate to the disclosure of sensitive information, unauthorised access to data and failure to protect your customers’ personal information.

Cyber insurance policies vary in terms of the coverage limits they offer, exclusions, specific circumstances and deductibles, so choosing the correct policy for your business can be difficult.

The experts here at Stanmore Insurance Brokers can help you choose the right cyber insurance protection for your specific business needs, and you can call us for a free, no-obligation quote, before you sign on the dotted line. 

The benefits of cyber insurance

Depending on the exact cyber insurance policy you choose, it should provide you with the following benefits: 

  • Loss of business income
  • Business operation interruption
  • Legal action and fines, such as GDPR charges
  • Ransom costs
  • PR support
  • Possible systems repair expenses
  • Investigative proceedings following data breaches

In addition to those practical elements of the insurance policy itself, you will also enjoy access to expert advice and support.

Another valuable benefit of cyber insurance is that it can help you build a stronger cybersecurity framework. Insurance providers will insist that you have a good level of security in place to be eligible for one of their policies, which can identify areas you can improve to give your business greater protection.

Finally, one huge benefit of cyber insurance is that it gives you considerable peace of mind. No matter how much cyber security you have in place to protect your business, the threat landscape is always evolving, and you can never be 100% sure you won’t still suffer from a cyber attack.

With a cyber insurance policy, you have the final safety net in place ensuring that you don’t have to worry about recovery costs should the worst happen and your business falls victim to a cyber attack.

Cyber Protection with Stanmore

Cyber insurance is critical for any business that uses web-based systems and social media in the office and when working from home – this includes SMEs and larger businesses like healthcare providers, financial institutes and solicitors. This form of insurance coverage can help protect your business against the potentially catastrophic financial liabilities and losses that often result from a major cyber attack.

Cyber insurance can be complicated, so be sure to speak to one of our expert advisors at 01204 570370 today.