Hacking and cyberattack cases have been increasing over the years. Many modern businesses are targets of cybercrime. If you don’t take preventive measures, it’ll remain a threat lurking to steal your data.
It’s essential to safeguard your company from all sorts of cybercrime, such as data breaches. Otherwise, you risk losing confidential information, causing your business significant financial loss and information leaks.
Getting cybersecurity liability insurance is a proactive measure to prevent such cases. This way, you’ll receive compensation in the event of hacking, boosting your company’s chances of recovery. However, choosing the most appropriate insurance coverage for your business can be challenging.
This guide seeks to ease your troubles while navigating cyber insurance premiums. Below is a look at cybersecurity insurance and the factors that can help you select the best coverage for your needs.
What Is Cybersecurity Insurance?
Cybersecurity insurance is also known as cyber liability insurance. It safeguards businesses from financial loss due to cyberattacks, such as system hacking, phishing, online fraud, etc.
Here are the two types of cybersecurity coverage:
Type #1: First-Party Coverage
It protects your company’s physical and digital assets. This cyber insurance plan includes all the damage or losses from a cybercrime event, which may include the following:
- Risk assessment for future cyberattacks
- Recovery of lost data
- Intellectual property
- Reputational damages
- Revenue lost due to business interruption
- Forensic investigation services
Type #2: Third-Party Coverage
It covers the compromised assets of others due to your company’s negligence. If a third party sues you for damages, it can protect your business. Fees covered under the third-party plan include the following:
- Settlement expenses
- Legal defense fees
- Regulatory fees for noncompliance
Most general liability insurance plans don’t include cyber insurance. You can get it separately to protect your business against cybercrimes further.
Factors To Consider When Looking For Cybersecurity Insurance
Choosing a cybercrime insurance cover that best protects your company’s data can be daunting. Here’s a look at the different tips to consider:
- Coverage For Privacy Breach
The coverage of your cybersecurity insurance is one of the essential elements you need to consider. Below are the critical aspects to include in cybersecurity coverage:
- Data loss
- Liability because of personally identifiable information breach
- Reputation recovery, public relations, and cost of notification
- Business interruption cost due to cyberattack
- Ransomware or data extortion
- Legal expenses
To help you decide whether a cover best suits your business, here are some aspects to consider:
- Identify the areas you want to cover
- Determine your company’s unique needs
- The level of protection
Getting comprehensive coverage is vital for companies in the financial or healthcare sector that store in-depth customer information. Hackers may see you as a potential target if your business holds critical customer data. On the other hand, it’s best if your cybercrime insurance policy covers penalties or fines in such instances.
Carefully examine whether your business needs first-party and third-party coverage or both. You can evaluate your option depending on your industry, the potential threats you face, and your company. Remember, finding an insurer to cover everything you need is the goal.
- Select An Insurance Provider
Working with an insurance provider with the necessary experience in cybercrime insurance is essential. Most traditional insurance providers perform differently in the digital assets area. Some still use a questionnaire-based approach to track the possible risks that your company faces. It can be ineffective for individuals who don’t have the best answers to the questions.
New insurance providers in the cyber insurance space are using data-driven technologies to help their clients. Their unique approach involves consulting with your business. As a result, they can create a cybercrime policy matching your needs. It also ensures your company gets proper protection before and during the policy term.
Choosing an insurance provider more experienced with cybercrime incidents can alleviate your worries. The more claims a provider has handled before, the better they can help you during emergencies. Such a provider knows how to protect you from potential attacks in the best way possible. It’s also necessary to ensure they respond promptly during a cyberattack.
- Weigh The Premiums
Cyber insurance is still new in the market. As a result, the premium costs for cybersecurity insurance are volatile. For example, the cost of premiums in the third quarter of 2022 increased by 66%. However, it’s lower than the 102% year-on-year rise recorded in the year’s first quarter.
Even with the reduced cost of premiums, the market is still experiencing fluctuations. This information can help you anticipate if there’s an unforeseen increase. However, it’s crucial not to overspend on premiums and instead aim for some balance.
Take your time to consult different insurance providers to examine their coverage to get the best value. These two factors can help you determine the appropriate premiums to pay:
- Your company’s chances of a cyberattack
- The compensation value after an attack
Some companies choose a cover that offers minimal financial burden. However, you might not get the proper coverage. A cybercrime insurance policy that gives you optimal value for money is best. Remember, cyber insurance is an asset that protects your company from significant financial losses.
Meanwhile, investing in an excellent cybersecurity infrastructure can help you get a better deal on cyber insurance premiums. If the insurer does a risk assessment and finds fewer vulnerabilities, they may offer you lower premiums. After all, a well-secured cybersecurity infrastructure suffers a lower risk of cyberattacks.
Cyber insurance is still new in the industry. And because there’s no long-term data to guide your decision, choosing a plan can be confusing. The details may overwhelm you, especially if you’re not much into tech and want a cover that offers you great value.
Assessing the crucial factors for the right cyber insurance can help you choose the most suitable for your needs. It’s best to check the coverage for privacy breaches, select your insurance provider carefully, and evaluate the premiums against the benefits and coverage. These measures are advised for businesses of all sizes and in every industry.