Almost every business is at risk of a cyberattack — hackers are opportunistic and will go after the easiest prey. That’s why it’s essential for companies to have cybersecurity insurance in place. In this article, we’ll discuss what businesses need to know about cybersecurity insurance so they can make an informed decision about whether or not it’s right for them.
What is cybersecurity insurance?
It protects businesses from financial loss after a cyberattack, like a data breach or hacking. It can cover the cost of response and recovery efforts, as well as any legal fees and public relations expenses resulting from the attack.
What does cybersecurity insurance cover?
Most plans will typically cover the following:
- Expenses incurred from responding to and recovering from a cybersecurity crisis
- Financial losses from fraudulent wire transfers, data extortion, damage to digital assets, and business interruption
- Forensic expenses to determine the scope and source of the data breach
- Costs incurred from notifying customers, employees, business partners, and relevant authorities about the breach
- Legal fees associated with defending against data breach lawsuits
- Fees from public relations consultants who will help manage the fallout from a data breach
What are the exclusions in cybersecurity insurance?
Much like any plan, there are exclusions and limits to what it will cover. For example, most policies will not cover the cost of property damage caused by a cyberattack and lost revenue due to a data breach. Insurance companies may sometimes exclude coverage for certain security incidents, such as those resulting from employee negligence.
That’s why it’s crucial to read the fine print of any policy before purchasing it. Businesses should also work with an experienced insurance broker who can help them find a policy that meets their specific needs.
What cyber threats should businesses be insured for?
There are many types of cyber threats worldwide, but businesses should focus on insuring themselves against the most common ones. These include:
- Data breaches – Whenever sensitive information is lost, stolen, or released without authorisation, it’s considered a data breach. This can happen if hackers gain access to a company’s servers or if an employee accidentally sends customer data to the wrong person.
- Phishing scams – Phishing is a type of cyberattack where hackers send fake emails or texts to get victims to click on a malicious link or attachment. This can lead to malware infecting devices or compromising sensitive information.
- Malware – Malicious software can find its way onto a computer or device and wreak havoc by deleting files, stealing information, or completely taking over the system.
- Ransomware attacks – Ransomware encrypts files and renders systems inoperable until the victim pays a ransom, usually with cryptocurrency. This can be extremely disruptive and financially devastating for a business, especially if they don’t have data backups.
Who needs cybersecurity insurance?
Any organisation that stores sensitive information or relies on technology should consider cybersecurity insurance. However, certain industries are often prime targets for cybercriminals and should take extra steps to protect themselves. The top five high-risk industries that can benefit from cybersecurity insurance are:
- Banking and financial services
- Personal services
- Legal, accounting, and management services
Why is cybersecurity insurance vital?
Having insurance is always a good idea, but it’s especially important in the case of cybersecurity. The costs of a cyberattack can be extremely high, and many businesses are not prepared to handle the financial fallout. Many Australian businesses that don’t have a safety net following a data breach can end up closing their doors for good.
Cybersecurity insurance can help businesses recover from the financial impact of a cyberattack. With the right policy, a business can get incident response services, data recovery, legal assistance, and reputation management support.
How much does cybersecurity insurance cost?
The insurance premiums for cybersecurity insurance can vary depending on several factors, such as the insurance provider, the size of the business, the industry it’s in, and the amount of coverage it needs.
The average business may only need $200,000 in coverage, while larger or highly regulated businesses may require more than $5 million in protection. Annual premiums can start at $500 up to more than $5,000 for higher-end policies. While cybersecurity insurance costs may seem steep, the cost of a data breach can easily reach millions of dollars.
How to insure a company?
Getting cybersecurity insurance involves completing a few steps. The first is to conduct a cybersecurity audit. This will help a business understand the vulnerabilities in its current security measures and the types of risks it is often exposed to. Consulting with a cybersecurity expert can be helpful for providing an objective assessment.
Then, they need to find the appropriate insurance policy. There are several cybersecurity insurance providers in Australia, including Chubb, BDO Australia, and AIG. When comparing policies, ensure they have the appropriate coverage limits and cover the types of attacks the business is most vulnerable to. Asking for a quote will enable the company to compare insurance coverages and rates.
Once a policy has been selected, the final step is signing the contract and keeping up with premium payments.
If you have any more questions about cybersecurity insurance, Empower IT can answer them. We have a team of certified cybersecurity experts who can help you understand your risks and ensure your company is well protected. Contact us today to give your business the safety net it needs.