While Aeko doesn’t provide cyber security insurance policies, we do offer managed IT and cybersecurity services for local Fort Worth businesses and professional organizations. Part of those services is educating business owners about all the things they need to protect their business continuity, which includes cyber insurance.
It seems like there’s an insurance policy for everything: your car, house, motorcycle, boat; you name it, there’s a policy for it. A crucial part of protecting your business is investing in cyber security insurance. Hacks and data breaches are running rampant, targeting small businesses and large corporations alike. It’s important to understand what cyber security insurance is, as well as its different varieties.
What Is Cyber Security Insurance?
Cyber insurance covers a plethora of things. It mitigates the effects of a cyber security incident and covers the cost of recovery from such events. There are two types of cyber insurance coverage:
- First-party coverage covers reimbursable expenses incurred after a cyber security incident.
- Third-party coverage covers expenses incurred from lawsuits that result from a cyber security breach.
Each policy is different. Policies may cover losses during downtime, fines from compliance gaps, software updates, hardware installation, property damage and more. It’s important to read the fine print so you know exactly what is and isn’t covered. Make sure each component of your policy is laid out in your contract, or you may end up with insufficient coverage after a cyber attack.
Cyber security insurance does not eliminate the need for cyber security measures. When you buy a policy, you agree to do everything in your power to avoid incidents in the first place. It does not cover potential future lost profit, loss of value due to theft of intellectual property and the cost to upgrade systems.
Does My Business Need Cyber Security Insurance?
We recommend cyber security insurance for most businesses. Any company that stores personal information of customers, performs online payments or uses cloud services should buy cyber security insurance. Even small businesses should consider adding it to their security practices.
Unfortunately, cyber insurance won’t prevent data breaches, phishing scams and other types of cyber attacks. It will, however, mitigate the damage done by such an attack by securing as much money as possible to correct the issues created by a breach.
Some cyber insurance plans will even cover fines imposed when your business fails to meet compliance regulations including PCI, CMMC, DSS, HIPAA and more.
Types of Cyber Security Insurance
Each policy contains different kinds of cyber insurance. There are three main types that you should be familiar with:
Network Security Insurance
This is a type of first-party coverage of direct costs. Also known as data breach insurance, this type of insurance covers your business in case of a data breach, malware infection, cyber extortion demand, ransomware attack or phishing scam. Costs that may be covered include:
- Repairs to hardware and software
- Data restoration
- Customer notification
- Credit monitoring for those impacted
- Ransomware payment
Cyber Crime Costs Insurance
This is also a type of first-party coverage that deals with losses as a direct result of cyber crime and those due to fraud. It covers financial situations including account hackers and social engineering hacks.
Cyber Liability Insurance
This is a type of third-party coverage. Also known as privacy liability coverage, this type of insurance covers your business in case someone impacted by the breach decides to sue. It may be a customer or employee whose leaked data was protected by compliance regulations. It could also be a governmental organization. Cyber liability insurance may cover attorney fees, settlements, judgements and regulatory fines.
Cyber Insurance Checklist
A good cyber security insurance policy should be customized to fit your business’s specific needs. Regardless of its size and industry, make sure you know where your business stands on these coverage areas:
- Business interruption: Downtime is akin to burning cash at a small business. This option covers costs incurred due to business interruption caused by a cyber event.
- Cyber extortion: Ransomware is the most common type of cyber extortion. Costs covered include paying the ransomware or hiring a negotiator.
- Credit monitoring: Offering credit monitoring to impacted customers can help regain their trust. Insurance can cover the costs of setting up a monitoring service.
- Forensic expenses: Serious cyber security threats require investigation and elimination of your digital crime scene.
- Legal expenses: Breaches of private information, especially when compliance regulations are involved, often end in a legal battle. Insurance can cover the costs of settlement and lawsuit defense.
- Notification expenses: Your clients deserve to know that their data has been (or may possibly be) compromised in a data breach. Your customers will find out one way or the other, so it’s best for notification to come from your business right up front. This option may cover the cost of resources to field client concerns or even setting up a call center.
- Regulatory expenses: If regulators determine that the data breach was your business’s fault, fines and penalties will ensue. These expenses may be covered by your policy.
- Reputation harm: Your business is expected to protect customer data when shared. When it is breached, customers may be rightfully frustrated, even if it wasn’t your fault. For a period of time after a cyber security breach, reputation harm can be managed with funds for a PR campaign or agency.
- Social engineering: Scams are becoming exceedingly intuitive. Don’t get caught off guard if your employees are tricked into directing money to cyber criminals or giving them access to your data. Good cyber security insurance will provide coverage for these losses.
We hope you never have to use your cyber security insurance. Having a cyber security plan is the best method to proactively manage your data and keep private information secure. We can help you craft a cyber security plan for your Fort Worth business. Don’t rely on your policy to assist you after an attack. Contact us or book a meeting today.
2022 Cyber Security Essentials Checklist
See where your business stands with these 18 critical cyber security controls established by the Center of Internet Security (CIS). Plus see the types of attacks most likely to impact your business.