What Is Cybersecurity Insurance and Should Our Company Consider It?
When you first start a business there are certain types of insurance you need to have in place. For example, there is general liability insurance, commercial property insurance, and if you use any automobiles in your business, you have auto insurance as well.
Some companies even take out what they call a key person policy for a critical CEO and other leadership.
One newer type of business insurance has been gaining in popularity and it relates directly to the danger that companies face as the result of a cyberattack.
Cybersecurity insurance, also known as cyber liability insurance, provides some protection in the event of a cyberattack. While the IT security tactics you take, such as adding a network firewall, using managed IT services, implementing anti-malware, etc. all play an important part in reducing the risk of a cyberattack, if one does happen, what then?
Recent Increase in Cyber Attacks & Risk
Over the last 18-24 months, the cybersecurity landscape has changed dramatically. There has been a convergence of factors that have made the risk of a breach or malware attack go up along with the costs to remediate an attack.
These factors include the pandemic and the disruption that has caused to businesses and their employees. It also includes the explosion of ransomware and the rise of Ransomware as a Service (RaaS).
Some of the troubling statistics over just the last year include:
- Over the last 12 months, the cost to remediate a ransomware attack has risen from $761,106 to $1.85 million.
- Malware attacks increased 358% in 2020.
- Remote work has caused the average cost of a data breach to increase by $137,000.
Due to the increased danger for companies when it comes to online threats, it might be time to learn more about cybersecurity insurance and what it offers.
What Does Cyber Liability Insurance Do?
Cyber liability insurance (or cybersecurity insurance) provides additional protection, especially for small businesses, in the event of a data breach, ransomware attack, or similar IT security breach.
Just like other types of insurance, if an event happens that the policy covers, it provides money to help remediate the damage.
The cost of a cyberattack is stiff for all-sized companies but can be particularly devastating to small businesses that don’t have the resources to pay all the remediation costs at the same time as trying to rebuild from the damage.
60% of small businesses close their doors for good within 6 months of falling victim to a cyberattack.
Here are some of the ways that cybersecurity insurance protects your business. Note, each policy can differ according to the provider, so you’ll want to check carefully to see what any specific policy covers.
Reimbursement of Funds Paid to Ransomware Attackers
Some cyber insurance policies cover reimbursement of money that you had to pay to a ransomware attacker to decrypt your files. Approximately 57% of organizations pay the ransom when infected with ransomware.
Reasons for this include:
- Not having a backup
- Not knowing how long a backup will take to restore
- Afraid the attacker will release sensitive files
- Desperate to get operations back up and running quickly
Legal Services to Meet Data Privacy Compliance
Most companies these days have to meet at least one data privacy compliance requirement, this means that they may have to pay a service in the event of a cyberattack to meet reporting requirements.
This is another expense that is typically covered by cybersecurity insurance.
To maintain compliance with one or more data protection regulations, companies need to notify those whose information may have been breached. This may include customers, vendors, and employees.
Lost Income from Downtime
Some cyber liability policies will cover your downtime cost, which can be a big chunk of your overall costs in the event of a cyberattack.
Downtime costs can run several hundreds of thousands of dollars for a small business and getting this recouped through insurance can mean the difference between staying in business after an attack or not.
Lawsuits Originating from the Breach
Companies that have a data breach that exposes sensitive information of others (SSNs, FEINs, etc.) can get hit with lawsuits from those whose data was exposed.
Cybersecurity insurance can help you cover these costs as well, so you’re not drowning in legal costs after you’ve already paid immediate remediation costs.
Crisis Remediation/Related IT Costs
Cybersecurity insurance can also cover your technology-related costs for remediating the malware if infected, hiring an IT security professional to identify and fix the source of the vulnerability, and other costs related to getting your IT infrastructure back up and running.
Credit Monitoring Services
Companies that have a data breach will often offer free credit monitoring services to those impacted as a way to mitigate damage and potential future lawsuits.
The costs of offering those services can also be included in a cybersecurity insurance policy.
How Vulnerable Is Your Network to an Attack?
Is your network vulnerable to a cyberattack? C Solutions can help your Orlando area business with a full security assessment, so you know where you stand.
Schedule a free consultation today! Call 407-536-8381 or reach us online.