Protect your company with cyber insurance coverage
What is cyber insurance
Cyber insurance coverage, also known as cyber risk insurance or cyber insurance, is a risk management product designed to mitigate their risk exposure on the cyber-related security breach. It mainly caters for offsetting costs involved with recovery. Insurance for cyber security can greatly improve losses in case of a breach.
The health care industry has been identified as one of the vulnerable sectors of data breaches. The cyber insurance coverage product is designed to defend their clients if their personal info is compromised, most frequently during a data breach.
According to data breach notification laws, the regulation required businesses to be responsible and pay for the data breach. This had increased the financial and legal stakes for a company that holds sensitive information from their client.
Massive class-action lawsuits and regulatory fines became synonymous with data breaches. For instance, beneath the FOIP / PIPEDA / Personal Health Information Protection Act, 2004 (PHIPA) for Ontario, the company may face severe fines for violating the privacy and protection rules.
Hackers love the trend of businesses outsourcing their data processing to cloud suppliers or using personal mobile devices to conduct business. These have become easy targets for hacker attacks and data breaches.
A data breach is a possible danger since data is now in a less protected environment. Statistics prove that information breaches are happening more often, increasing 32% in the healthcare sector, according to a study on individual privacy and data protection by the Ponemon Institute.
419 information breaches were publicly disclosed in 2011 in the US according to InformationWeek and a combined of 22.9 million records exposed, according to a study by the Identity Theft Resource Center.
Companies have started managing risk in seeking coverage of their costs connected to data breaches. One of the solutions is to get cyber insurance coverage, or started insurance for cyber security
Businesses have discovered benefits with cyber insurance coverage. The cyber insurance coverage was developed to cover any gap. According to The Betterley Report, cyber insurance generally protects obligation for data violation or loss of data, remediation costs to react to a breach, and legal, regulatory fines and penalties. Always consider insurance for cyber security
Insurance for cybersecurity
In this age of constant internet usage, as long as small businesses use computers connecting to the internet, emails, or other purposes, they are vulnerable to cybercrime risks. Once hackers gain access to a business's system, it can result in a security breach that would be very costly to replace or restore without cyber insurance coverage.
So what Is Cyber Insurance Liability Coverage?
Cyber insurance liability coverage protects the financial losses resulting from data breaches and other cyber events. Most cyber policies include both first-party and 3rd party coverages. Talk to your insurance broker to determine what is included and what other options are available separately.
First-party coverages will pay expenses to the company directly incurs due to the infringement of data, like the cost of informing your clients about a possible attack.
Third-party coverage, on the other hand, applies to claims against insured by individuals or businesses that suffered financial losses as a result of the breach, and the insured failed to act in time.
A typical example here, a client sues a business for negligence following a hacker steals his data from the computer system and releases it online.
Here are the types of first-party coverages you're very likely to find at a cyber liability policy. These coverages can be subject to your deductible.
- Loss of Income and additional expenses
Covers income losses a business suffered and expenses incurred to prevent or decrease the company's shutdown after a computer system fails due to a covered peril.
- Loss or Damage to electronic data -
This section of cyber insurance coverage will cover the cost for a business to replace or restore, consider insurance for cyber security
1) electronic data or
2) programs destroyed or
3) stolen from a data breach,
whether the information belongs to your company or in your care.
Losses should result from a covered danger like a hacker attack, a virus, or even a denial service. This would sometimes cover the costs of consultants/experts to help recover data.
- Cyber Extortion -
- This applies when a hacker breaks to a business computer and threatens to commit a nefarious act for ransom.
- Some act including
- threaten to erase data,
- introducing a virus,
- initiating a denial of service attack,
- or disclosing sensitive data
- If you do not pay a specified amount in time.
- The coverage typically will provide extortion of payment and expenses you incur in responding to a claim made.
- Notification Costs - Covers the costs of notifying parties impacted by a data breach. It can also cover the cost of establishing a call center and supplying credit monitoring services.
- Damage to your reputation - Some policies can cover the costs you incur to get promotion and public relations to guard your institution's reputation following a data breach. This coverage can be known as Crisis Management. Every Cyber Liability Policy contains specific terms, which are explained in the Definitions section. Talk to your insurance broker regarding cyber insurance coverage, or insurance for cyber security needs.
Some policies may cover dependent income losses. These are income losses you maintain when the network provider's system has been breached.
Third-Party Liability Coverages
The liability coverages afforded by cyber policies are usually claims-made. Coverage usually applies to damages or settlements that result from covered claims and the cost of your defence. Note that defence costs may reduce the limit of insurance.
- Network Security and Privacy Liability
This feature will cover network or privacy claims against the business. Any negligence acts, mistakes, or omissions that result in a denial of service attack, the introduction of a virus, unauthorized access, or other security breaches of the insured business computer. It also covers claims alleging the company failed to protect sensitive data stored on their computer system properly. Even the data may belong to customers, clients, employees or other parties.
- Electronic Media Liability
This part of cyber insurance coverage protects lawsuits against a business from acts like defamation, slander, copyright infringement, invasion of privacy or domain name infringement. Generally, these acts are only covered if they result from your electronic data publication on the internet.
- Regulatory Proceedings
This insurance section will cover fines or penalties imposed on the firm by regulatory agencies overseeing data breach laws. It also covers the cost of hiring an attorney to assist in your response to a regulatory proceeding.
The Bottom Line
Cyber insurance coverage policies will protect your business from claims and expenses resulting from data breaches. Each cyber insurance coverage is not standardized and may contain unique terminology.
Most policies are flexible enough so that you can choose the coverages you want. If you need help with your insurance policy, ask your agent or broker for assistance for any insurance for cyber security. For information about other types of insurance, click here.