4 Categories Of Cyber and Privacy Insurance

There is always the risk of a cybersecurity attack. You can check and double-check your cybersecurity, but you won’t be able to eliminate all your vulnerabilities. Hackers could still steal sensitive information and finances, bankrupting your business.

What can you do to keep your business secure? Invest in some cyber insurance—it is one of the only ways to complete your cybersecurity plan and recover your business after a cyber attack.

What is cyber insurance? Cyber and privacy insurance is designed to cover potential losses caused by cybercrime or a data breach. Such insurance policies help companies protect themselves and limit their liability in a cyber attack.

Generally, there are four categories of cyber and privacy insurance that your business could choose from.

1. Network security and privacy liability. First, insurance companies typically offer a policy for network security and privacy liability. This is probably the broadest category as it covers your business in the event of a network security failure, whether that is a data breach, a malware infection, a ransomware demand, or other types of cybercrime. The policy will usually cover the cost of forensic investigations, public relations assistance, ransomware demands, data restoration, legal expenses, notification of affected parties, and credit monitoring for those parties.
2. Business interruption. Another type of insurance is business interruption coverage. If your business’s processes are interrupted due to a cyber attack, this policy will cover your loss of income and even extra costs incurred during the interruption. For example, the policy will cover your profit loss if a network you rely on for operation, either your network or a third-party network, goes down and halts your business operation. Or, this policy could cover your business downtime during a ransomware attack.
3. Media liability. The third type of cyber and privacy insurance is media liability. You may need this coverage if you publish your intellectual information online, and it gets stolen because media liability will cover the legal costs associated with recovering your intellectual property. Keep in mind though, this policy will not cover the loss of company value due to the theft of your intellectual property.
4. Errors and omissions. The last type of cyber insurance, errors and omissions, will cover your liability if a cyber event prevents you from delivering services to your customers. Coverage can include legal defense costs or indemnification when customers sue you for breach of contract.

While those four categories of cyber and privacy liability insurance don’t include all possible coverage options, they should give you a good idea of what your cyber insurance policy may cover.

If you start looking into these different policies, you may find that there are a lot of cyber insurance requirements. 2022 has brought even more cyber insurance requirements that your company must meet before insurance providers will cover your cybersecurity risk. These requirements can range from antivirus software to data backup and firewall protection. But don’t become overwhelmed by the requirements. The benefits of cyber insurance far out way the time, paperwork, and other requirements needed to get insurance.

Cyber Insurance Benefits

What are these amazing cyber insurance benefits? There are many to mention.

First, the most obvious benefit is how cyber insurance mitigates some of the costs associated with data breaches. In 2021, the average cost of worldwide data breaches was 4.24 million. These costs include data recovery, forensic investigation services, legal fees, notification systems, and credit monitoring for the affected parties. Cyber insurance can cover some, if not all of these costs, making it a worthy investment.

Furthermore, if your company doesn’t have 4.42 million to spare, a single data breach could cause your company to go under. So, cyber insurance can save your company from bankruptcy, as another benefit.

You might also increase your customer trust and retention rates if you invest in cyber insurance. After a data breach, your customers may not trust your company’s security or want to do business with you. But cyber insurance will cover several services for your affected customers, including credit monitoring. These services can help make your customers feel valued and protected after a cyber breach, so they are more likely to continue with your company.

Those are just a few of the possible benefits. All the different types of cyber insurance offer specific benefits that your company can enjoy.

Cybersecurity Insurance Coverage

Now that you know the benefits that cybersecurity brings, you need to know more information about cybersecurity insurance coverage.

Naturally, the different policies that you can choose from all offer slightly different coverages. However, there are some costs that you can’t find coverage for. What does cyber insurance not cover?

Most policies will not cover any cybersecurity system upgrades you want to make. So, if you want to upgrade your cyber security or switch to a more expensive vendor, plan to pay for that cost yourself.

Cyber insurance policies typically do not cover future profit loss after a cyber attack either. If your business experienced a cyber attack and lost customers afterward, your insurance policy will not cover the profit loss from the reduction of customers. It will only cover the costs incurred as immediate results of the cyber attack.

As the final limitation, you probably won’t find a policy that will cover the decreased valuation of your company. Your intellectual property may be stolen from a data breach or other digital theft, and this will lower the overall value of your company. However, your cyber insurance policy—even if you have a media liability policy—typically will not cover the loss of your company value.

With these coverage limitations in mind, you need to look carefully at any insurance policy you are considering. Some policies will include more coverage limitations than we mentioned here, which means your business may not be fully covered in the event of a cyber attack. Ask for a cyber insurance policy sample if you need to, and check the description for any significant exemptions. You might even want to make a cyber insurance coverage checklist you can use to determine the quality of coverage that you’ll receive from a provider.

What Is Cyber Liability Insurance

During your insurance search, you could come across insurance mentioning cyber liability coverage. What is cyber liability insurance?

The simple cyber liability insurance definition is that it will protect your business from the costs associated with a data breach or malicious software attack. So, it’s almost the same insurance as cyber and privacy insurance. But cyber and privacy insurance has more broad coverage options, including media liability and property losses, while cyber liability insurance focuses on losses associated with a cyber security breach.

Oftentimes, to get cyber liability insurance, the insurance provider will have a list of requirements that your business must meet. These cyber liability insurance requirements depend on the insurance company you choose, but some possible requirements include:

• Multi-factor authentication
• A recent risk assessment
• Cybersecurity training
• Data backups
• Firewalls

Also, the cyber liability insurance cost will vary based on the extent of coverage you choose. More coverage from your insurance means a larger premium, but less financial loss after a cyber security breach. For specific numbers, you’ll have to contact the insurance company directly.

Cyber Insurance Companies

Now, to actually get cyber insurance, you must find a cyber insurance company that offers the right policy for your business. But there are hundreds of cyber insurance companies available in the cyber insurance market—all with slightly different coverage options. You have the difficult task of searching through the insurance companies and policies, determining what each policy offers, and choosing the best insurance company for your business.

So, you’re probably wondering how to determine cyber insurance coverage and choose an insurance company. Something simple you can do is use a cyber insurance coverage checklist. We already suggested making your own with the coverage requirements you need specifically for your business. But if you don’t have time to compile a complete checklist, you can use the Federal Trade Commission’s cyber insurance checklist. They recommend ensuring that your policy covers data breaches, cyber attacks on your network, and data breaches in your vendor’s network.

Feel ready to find a cyber insurance company for your business? Start with Trava. We have coverage for stolen funds, loss of business income, breach response, ransom payments, and computer replacements—just to mention a few.

But we don’t just offer cyber security insurance. We can also work with your business to assess the current cyber risks you have and eliminate or reduce those risks with our security tools. Our services are specialized for small and medium-sized businesses, so we can develop the right cyber security plan for your needs. Our top priority is protecting your business however we can.

Want to see how we can protect your business with cybersecurity insurance? Get a free quote in minutes with our insurance portal! Or contact us today for more information.

Sources

• https://www.cloudwards.net/cyber-insurance/‍
• https://www.ibm.com/security/data-breach
• ‍https://www.investopedia.com/terms/c/cyber-and-privacy-insurance.asp.
• https://www.ftc.gov/business-guidance/small-businesses/cybersecurity/cyber-insurance