What is Cyber Insurance?
Cyber attacks are happening more and more each year, and small businesses are being targeted. In 2022, up to 93% of company networks can be breached by cybercriminals. Your company is always at risk of a cyberattack no matter how robust your security controls are.
Fortunately, there are more layers of security to protect your organization from cyber threats. After all, small businesses are especially susceptible to data breaches. Different types of cyber insurance are some of the only reliable ways to make sure that when (not if) your company’s security is breached you have some kind of support.
Cyber insurance, or cyber-liability insurance, is an insurance policy that protects companies from the adverse effects that come as a result of a cyber attack. Cyber insurance can help with some of the financial impact of cyber attacks as well as reduce business disruptions that come with a security breach. The right cyber insurance policy can make recovering from cyber attacks much less of a headache than dealing with the impact alone.
There are certain types of attacks that cyber insurance can not cover. Understanding the fine print of your policy is crucial when purchasing cyber insurance. Having cyber insurance does not mean that you don’t have to keep your cybersecurity up to date. It serves as extra protection in the event your company is the victim of a cyber attack.
Cyber Insurance Coverage
Like any other insurance, it is important to understand what your policy covers and what it doesn’t. Knowing what you are covered from in the event of a cyber attack can help you reduce the amount of time your business operations are disrupted, getting you back to what you do best as soon as possible.
In general, cyber insurance is designed to cover the immediate effects of cyber attacks. Things like the cost of hiring forensic specialists to find out where the attack originated and fix the issue, data recovery costs, court costs, and customer reparations are all basic coverages of any decent cyber insurance policy.
Many insurance companies will offer as little coverage as possible to minimize their costs when your security is breached. Some important coverage items to make sure your policy has might include:
- Ransomware coverage
- Social engineering coverage
- Coverage of all data breaches, not just digital
- Loss of income coverage for business interruptions
- Dependent business interruption coverage
Of all the current cyber insurance trends, the increase in demand is likely at the top. Unfortunately, an increase in demand also comes with an increase in cyber insurance cost. It is important to understand cyber insurance benefits, but also important to know what its limitations are.
What Cyber Liability Insurance Doesn’t Cover
What does cyber insurance not cover? One of the longest lasting effects of a cyber attack is the damage to an organization's public image and trust. Customers' personal identifiable information (PII) is one of the top targets for hackers, especially in ransomware attacks.
The attackers will encrypt sensitive customer data such as physical addresses, phone numbers, emails, and social security numbers. Once they control access to this information, they will offer a decryption key to the affected business for large sums of untraceable currency, often some kind of crypto currency.
When this happens, customers will need to be notified that their personal data has been stolen. This can damage your businesses reputation for years, potentially costing your company huge profits in the long run.
Most policies will not cover upgrades you make to your security systems after an attack, any loss of future profits due to reputational loss after an attack, and decreased valuation of any company assets. Our CTO and Co-founder, Rob Beeler goes into these aspects in greater detail here.
Who Needs Cyber Insurance?
In short, all businesses need cyber insurance. Cyber attacks are showing no signs of slowing down any time soon, and small businesses are at some of the highest risk for attack. Hackers see small businesses as easy targets with fewer resources to detect and repel cyber attacks in comparison to larger companies with more robust security budgets.
A cyber liability insurance policy won’t stop attacks from happening. It will help minimize the fallout. In many cases, cyber attacks on small businesses ended up putting the organization out of business for good. Cyber attacks and data breaches can affect businesses for years after the attack itself is over.
This makes it hard for small businesses to bounce back without some help. While cyber insurance is a bit limited compared to the amount of damage an attack can do, a well built insurance policy could be the difference between going out of business and keeping your organization operational.
The Future of Cyber Insurance
As cyber attacks become more frequent and more damaging year after year, cyber insurance companies are in a difficult position. Ransomware attacks are some of the most common and most costly cyber attacks in action these days. Put plainly, cyber insurers are very afraid of ransomware attack trends, causing many insurers to tighten their policy requirements or pull out of the cyber insurance industry altogether. This means that insurance premiums are on the rise, and difficult to find and qualify for.
Most cyber insurance companies will not consider covering a business unless its security meets strict specifications and maintains that level of security for the entirety of the policy length. so , businesses looking to buy into the extra protection that insurance can provide need to make sure their cybersecurity controls are in compliance with industry regulations to even qualify for insurance.
The more evolved cyber attacks become, the harder they are to prevent, meaning cyber liability insurance premiums will keep rising for the foreseeable future. While expensive, having a policy could still be the difference between keeping your business up and running and closing the doors for good.
What You Need to Apply for Cyber Insurance
In order to apply for cyber insurance, you need to prove that your business’s cybersecurity can stand up to a cyber attack attempt on its own. As stated above, insurance companies will not want to insure an organization that would make an easy target for a cyber attack. Keeping your security controls current with regular tests and patches will give you the best chance of being qualified for insurance.
Acquiring and maintaining security compliance certifications can greatly increase your chances of getting a cyber insurance policy. SOC 2 and ISO 27001 certifications can go a long way in proving your company’s dedication to cybersecurity in the eyes of insurers. Having these certifications at one point in time will not be enough, however.
In most cases, cyber insurance policies will be reassessed every 12 months. This allows insurance companies to make sure the organizations they insure are keeping up on their security controls. Just because you acquired insurance for your company does not mean you can push your cybersecurity to the back burner.
Keeping up on cybersecurity starts with understanding your cybersecurity weaknesses. Trava offers a range of tools that can help you determine where your security is lacking and help you fix those shortcomings. Trava’s vulnerability scanner can help prepare you for industry leading cyber security certification audits. Trava also offers cyber insurance to help protect your business from the evolving world of cyber attacks. Contact Trava today to learn more about our cyber insurance policies.