To say that cyber security is important is an understatement. With how many people and businesses rely on Internet-connected systems nowadays, cybersecurity becomes a must. As private data often gets stored on these systems, a cyberattack can be more dangerous, especially when there are no systems in place to prevent such attacks and no way to cover the costs of the damage caused by them. Ensuring cyber security is a critical aspect of protecting digital assets, user data, and maintaining the trust of customers and stakeholders.
In such scenarios, it becomes crucial to possess cyber security insurance. Recently, numerous businesses have contemplated this kind of insurance to safeguard themselves and their clients. However, is the cost of cyber insurance truly justified? Continue reading to discover.
What Is Cyber Insurance?
Cyber insurance is a type of insurance that is meant to cover incidents related to cyber security. It’s not something that every business considers, and it will not always help fix all cyber security risks. However, it can be useful in the immediate aftermath of a cyberattack or data breach.
Cyber insurance can encompass aspects such as customer notification, data recovery, equipment repair, among other things.
The Different Types of Cybersecurity Insurance
When you consider cyber security insurance, there are two types of coverage that you can get, respectively:
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Third-Party Coverage
This kind of coverage safeguards against claims made by customers and various parties due to data breaches or cyberattacks. It is extremely beneficial as it caters to contract breaches or negligence claims, media liability claims, legal penalties and costs associated with regulatory investigations, as well as consumer class action lawsuits and potential settlement funds.
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First-Party Coverage
First-party coverage ensures you are covered for the direct expenses incurred due to a cyberattack. This includes:
- Replacement and repair of damaged hardware & software
- Credit monitoring for customers
- Extortion payments or ransomware
- Business interruptions or missed opportunities due to network downtime.
- The data breach resulted in legal expenses.
- Informing both customers and employees about the incident.
How Much Does Cyber Insurance Cost?
This type of insurance does not have a fixed cost. Nevertheless, a rough cost estimate can be obtained through a bit of research.
The cost of cyber insurance fluctuates depending on the industry. For instance, the annual cost for the financial services sector is approximately $2,429, although other sectors may have lower rates. However, the cost may also differ based on the state.
Is Cyber Insurance Worth It?
Regardless of whether you’re contemplating cyber insurance, it’s crucial to remember that it’s not obligatory.
ClearwayLaw CEO, Alistair Vigier, advises businesses dealing with highly sensitive data to consider investing in a cyber insurance policy. This type of policy is beneficial in managing responses to cyberattacks, reducing losses, and ensuring a speedy recovery, he states.
Simultaneously, this policy should be coupled with robust security measures to prevent cyber attacks from occurring initially.
Conclusion
Not all businesses may see the value in investing in cyber insurance. However, for those who wish to respond swiftly to an attack, cyber insurance can be extremely beneficial.
Is Cyber Insurance Worth It? Here’s What You Must Know First (iemlabs.com)
