The cyber insurance industry is a rapidly growing market that can be difficult to navigate for those seeking or renewing insurance. With underwriting and renewal processes taking longer to complete, read on our full guide on why you need cyber insurance.
why should you invest in cyber insurance?
Cyber insurance covers expenses from data breaches, viruses, or other cyber-attacks and fraud. It can also cover legal claims that come from a security breach. As companies utilize cloud software, personal computers and laptops, and other technology-based means to store their sensitive data, their risk for a security breach grows exponentially.
The Identity Theft Resource Center claims that in 2018, businesses experienced 571 breaches in security, which exposed 415 million employee and customer records.
In 2021, a cyber-attack incident occurred every 11 seconds.
If your company experiences a breach, federal law requires you to perform an extensive list of tasks. If you have cyber insurance coverage, however, your carrier will take on that responsibility.
Investing in cyber insurance helps protect your business from financial losses that can come with a cyber attack, and help keep reputation damage at bay.
is your business vulnerable to cyber-attacks?
As many businesses moved to a work-from-home model, cyber-attacks have increased. With most company communication through e-mail, Slack, and other online platforms, the risk of a breach increases. This could cause a company to experience massive monetary losses as well as reputation damage.
who needs cyber liability insurance?
While some general liability and professional liability policies include some basic cyber liability coverage, some additional coverage may be needed. Businesses that store personally identifiable information (PII) for both employees and customers should have additional coverage.
Cyber breaches can occur in a multitude of ways. They can be executed through phishing emails, viruses, ransomware, or other malicious attempts to corrupt your data. The best way to begin protecting your data is to establish internal safeguards with cyber security. This includes using strong passwords and monitoring electronic device access and access to software tools.
This form of coverage is growing in demand as we shift towards a cyber-reliant world. The National Associate of Insurance Commissioners found that the U.S. cyber insurance market “expanded to $4.1 billion in direct premium in 2020, representing an increase of over 29% from 2019.”
what does cyber liability insurance cover?
There are a few types of coverage within a cyber liability policy. First-party and third-party coverage help ensure you’re protected for whatever comes your way.
First-party coverage includes coverage for immediate expenses related to the cyber breach. These expenses typically include:
- The cost of notifying employees and the public
- Marketing and public relations response that protect the company’s reputation
- Extortion money
- Repairing the damage to software and hardware
- The cost of business interruption and missed income while operations are suspended
- Other ancillary costs
third party coverage
On the other hand, third-party coverage helps a company defend against lawsuits and legal claims. There are a few lawsuits that may occur. Privacy lawsuits are covered under this coverage in case you have breached the privacy of customers and employees.
Regulatory body fines are covered as well as media liability claims (copyright infringement, libel, or slander). Lastly, breach of contract and negligence claims are covered under third-party coverage.
what does cyber liability insurance not cover?
It’s important to understand what your insurance coverage does not cover. When you review your cyber security protections, you may be able to identify where your vulnerabilities lie. Some common exclusions from cyber liability insurance include:
- Bodily injury and property damage claims: Any claims of bodily injury or property damage will not be included in your cyber liability insurance policy. However, a general liability policy will cover these claims.
- Criminal activity: Cyber liability insurance policies do not cover fraud, robbery, employee theft, and other crimes. However commercial crime insurance will cover these claims.
- Social engineering: A cyber liability insurance policy will not cover when employees are tricked into transferring company funds. This can be an additional add-on with some cyber liability plans.
- Loss of property: When an employee loses a piece of property, like a phone or computer, cyber liability will not cover the cost. However, a commercial property insurance policy will.
Like many businesses, you likely utilize computers, and other electronic devices to send, receive, and store electronic data. Data is one of your most valuable assets. It’s important to ensure that you protect that data and consider the cost of losing it.
signs you’re at risk of experiencing a cyber-attack
Cyber-attacks occur without forewarning. Sometimes, businesses don’t initially realize that they’re under a cyber attack. Review the following signs that your business is experiencing a cyber attack.
- You’re receiving requests for transactions, like direct deposits or electronic fund transfers.
- Unsolicited communications are coming through from unknown companies or people.
- Links within emails do not match—check links by rolling your cursor over the link to see if the two match with the content and the email address!
- Requests with a high sense of urgency, asking you to complete documentation immediately.
- Requests for usernames, passwords, and other personal details like banking information.
If you realize you’re under a cyber attack, act immediately. First, disconnect your device from the internet, restore your system, and report the attack to your IT department.
After the attack, make sure you file a report with the police and your insurance.
how to mitigate risk
There are ways to decrease your business’s risk of falling prey to a cyber-attack. Being proactive about cybersecurity, and having cyber insurance helps keep your business information secure. Other ways to mitigate risk include:
- Limit your use of large email attachments and programs that put pressure on your company’s bandwidth ecosystems.
- Do not forward emails with attachments that contain highly restricted or company confidential information to personal accounts.
- Avoid reading, talking about, or leaving confidential information in unsecured work-from-home areas.
- Log off of work devices when you’re not using them.
- Shred sensitive documents.
- Restart your computer regularly.
- Be aware of third-party risk because 59% of companies experience a cyber breach because of a third party.
cyber claim tips
When submitting a claim, use our tips to make sure you have the most successful outcome.
- Prepare and understand your insurance policy beforehand. Before a breach occurs, understand and review your policy, and what it covers. Make sure the structure of the claim fits your business needs.
- File your claim correctly. Most cyber insurance claims are first-party claims because the most common types of cyber-attacks are ransomware, malware, and social engineering fraud. However, file a third-party claim if you experience the need for defense in a lawsuit. Once assigned, insurer claim adjusters quickly help mitigate losses and help the legal and forensic response.
- Do not wait to report your claim. Once you become aware that there is a breach in your cyber security, the first step is to report and file the claim as soon as possible. No matter what type of breach, do not wait to file a report because it’s easier to give assistance early on during a breach.
- Obtain insurer consent. Once the claim is filed, the insurer must give their consent to onboard attorneys, IT professionals, and investigators for the breach.
At benchmark commercial insurance, we offer global capacities with a boutique experience. What we do best is look at your company holistically and use our knowledge of changing policy to give you the security of knowing you’re covered. It’s true, anyone can get you cheap insurance, but not anyone can be there for you like we can when structuring your policy and filing a cyber security claim.
Curious about what other areas of your company may be putting you at risk for a cyber security breach? Read our article about why email may be your biggest cyber risk here.