Many businesses will take the time to think about investing in general liability insurance and physical insurance that will cover their properties. However, when it comes to thinking about cybersecurity, people’s knowledge of this area can often be limited to some antivirus software and a firewall.
With the advancement in technology and the data needed to manage that technology, the sophistication of attempted attacks on that data increases as well. This data needs protecting.
Without proper security measures in place, this can leave many businesses in a vulnerable position—exposed to the high-cost factor of cyberattacks, which is something that is increasing frequently.
Global research and advisory company Gartner conducted some research in this area. According to their studies, they have found that 43% of victims of major data loss go out of business immediately, with only 6% surviving the following two years. A fatal statistic for a preventable problem.
In the wake of these frequent cyber-attacks and data breaches, cyber insurance has become an interesting investment to explore, particularly by small business owners. There can be several great benefits to owning cyber insurance that your own business may want to consider.
What is Cyber Insurance?
Cyber insurance is a type of insurance that protects businesses against the growing amount of digital threats. It may also be known as cyber liability insurance or cyber risk insurance. It is designed to help businesses reduce the risk of data breaches by covering costs associated with data breach recovery should one occur.
There are many cyber dangers that threaten companies, large and small, all over the globe. Cyber insurance provides businesses the opportunity to offset the potential costs of a cyber attack and mitigate the risk of serious business losses if an attack occurs. Cyber insurance can be useful for businesses of all industries, including retailers, marketing companies, contractors, financial firms, and virtually any business that stores sensitive data.
According to IBM, the average total cost for a data breach is $3.92 million, which is incentive enough for companies to invest in cyber insurance. An exorbitant cost such as this can set a business back tremendously, so having a cyber insurance policy is a good way to mitigate those costs so you can still sustain business operations, even if a data breach were to occur.
What Does Cyber Insurance Coverage Include?
Each policy will cover unique items, but they will typically cover extortion losses and restoration of damaged data and software from viruses, worms, and spyware. They will typically also cover legal expenses, the costs of reputational damage, and the loss of business due to interruptions as a result of a cyber attack. Coverage is typically broken into two categories that include coverage for these losses:
This covers damages suffered by your business due to a data breach and can include business interruption coverage, investigative services, and data recovery.
This covers damages suffered by your customers or partners due to a cyber attack on your business. This generally includes covering the costs of legal fees, media liabilities, and settlement costs.
The amount of coverage you need depends on the risk your business faces. Most small and medium-sized businesses need stand-alone policies because they have higher limits.
What Does a Cyber Insurance Policy Not Cover?
It’s just as important to know what a cybersecurity insurance policy won’t cover as what it will. It will not typically cover physical losses and damages as a direct result of a cyber attack. For example, if machines are damaged as a result of a malicious attack by hackers, losses here will likely be covered by other types of business insurance.
They will also not cover social engineering attacks. Many customers are unaware of the fact that 70–90% of successful data breaches happen as a result of social engineering attacks, which are attacks that exploit human weaknesses rather than system vulnerabilities.
How Can I Get the Most Out of My Coverage?
Using a cybersecurity provider like Middleground can help bring insurance premiums down for your business based on the insurance policy questionnaire. This will help your business get a policy that covers your risk needs while also being affordable. You can learn more about cyber insurance policies and how carriers price them by reviewing this cybersecurity article.
It’s important to note that while cyber insurance is strongly advised, it’s not the only thing you need to protect your systems. Even with cyber insurance, suffering a data breach can cause several negative side effects that aren’t always compensated by your coverage. With social engineering attacks accounting for a large part of successful data breaches which aren’t covered, It’s best to be prepared by obtaining cyber insurance and by implementing strong cybersecurity defenses on your systems.
Middleground can also help your business achieve advanced cybersecurity to make sure their data is protected. We offer cybersecurity training to prevent attacks as a result of social engineering, 24/7 system monitoring to detect and patch system vulnerabilities, and data backup and disaster recovery planning. We can help you get the most out of your cybersecurity investment so that your systems remain well-protected and so that your business is prepared even if the worst happens.
If you’d like to learn more about how Middleground can help you with a cyber insurance policy and other cybersecurity needs, contact our team today at (312) 598-1302 or get a free assessment to learn more about your business’s risks.