Cyber risk insurance is a type of insurance policy that helps business owners protect themselves from the potential financial damages that can occur as a result of a cyberattack. This type of policy can provide coverage for things like data breaches, loss of income, and extortion. In this blog post, we will discuss what cyber risk insurance covers and how it can help businesses protect themselves against cyberattacks.
What is cyber risk insurance?
Cyber risk insurance also referred to as cyber liability coverage or data breach insurance, is a type of property and casualty (P&C) insurance policy that protects an organization’s assets from loss in the event of a successful cyber attack.
If you think your business isn’t at risk for a cyberattack because it uses outdated technology or because you don’t store any customer data, think again. A cyberattack can happen to anyone, anywhere, and at any time.
What does it cover?
Cyber risk insurance can help protect your business from a variety of losses that may occur as a result of a cyberattack, including:
- Business interruption
- Regulatory fines
- Costs associated with notifying customers of a data breach
- Legal fees and settlement costs
- Losses related to the theft
What doesn’t it cover?
There are some things cyber risk insurance doesn’t cover, such as the cost of improving your cybersecurity defenses or any losses that occur as a result of employee negligence.
Types of cyber risk insurance policies
There are a few different types of cyber risk insurance policies available, each with its own set of specific coverage options. Here are some of the most common types:
- Data breach policy: This type of policy provides coverage for the costs associated with notifying customers and regulatory agencies after a data breach occurs. It also covers the cost of repairing any damage done to an organization’s reputation as a result of the breach.
- Loss mitigation policy: This type of policy covers losses due to theft from cybercriminals, such as money or data stolen from bank accounts and credit cards. It also provides coverage for losses related to extortion and denial of service attacks (DDoS) on websites.
- Business interruption policy: This type of policy provides coverage for lost income and increased expenses that may occur as a result of a cyberattack.
- E&O insurance: Also known as Errors and Omissions insurance, this type of policy covers legal fees and settlement costs if your business is sued after a data breach.
How much does it cost?
The cost of cyber risk insurance varies depending on the size and type of business, as well as the amount of coverage required. Typically, small businesses can expect to pay between $500 and $2000 per year for a data breach policy. Larger businesses may pay more than $100,000 per year for a comprehensive policy.
Is it worth it?
Cyber risk insurance is definitely worth it for businesses of all sizes. The cost of a policy is relatively small compared to the potential losses that can occur in the event of a cyberattack. In addition, many insurers now offer discounts for businesses that have implemented strong cybersecurity defenses. It’s important to note that a data breach can be very costly for a business. It’s been estimated that the average cost of a data breach was $141 per record. If your business has a large number of customer records, that could add up quickly.
Cyber risk insurance is an important tool for businesses to protect themselves from data breaches and other online risks. By understanding the different types of cyber risk insurance policies available, businesses can find the right coverage to fit their needs. Have you purchased a cyber risk insurance policy? If not, why not? Let us know in the comments below.
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