Do You Have Cybersecurity Insurance? Here's Why You Might Need It

Published: Oct 14, 2024
By: Geoff Smarada
Topics: Cybersecurity
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What Is Cyber Insurance?

Cybersecurity insurance is a critical aspect of an organization’s insurance portfolio. Cyber insurance helps shift the risk associated with the financial burden of a cyber threat away from the organization and onto the insurance provider, which has the means to mitigate these cyber threats proactively, financially, and technologically. Although it can be initially costly, it will save time, money, and headaches later on if an incident happens.

Understanding How Cyber Insurance Works

Cyber insurance works the same way as other forms of insurance. Take car insurance, for example: When you get a vehicle, an automatic response is to insure the car as part of your accident response plan. Having car insurance provides a sense of security; the driver knows they are not alone in the event of an incident. Cyber insurance is the same, protecting from a cyber attack or a data breach. Organizations carrying cyber insurance can feel secure, knowing that their insurance provider is there in case of a data breach or cyberattack.

Common Cyber Insurance Requirements

When looking for a cyber insurance provider, organizations must first understand what type of data they store and where it is stored. The level of value and sensitivity determines what type of insurance coverage your organization will need in order to protect the data adequately. For instance, storing or transmitting credit card data or personal health information has regulatory requirements and requires more intensive security measures than a server solely storing general business data. This is due to the value of the data to a hacker. The more sensitive the information is, the more valuable is, the more valuable.

Once the data’s sensitivity level is understood, corporations must also make sure they meet the specific requirements to obtain cyber insurance. Standard requirements include but are not limited to:

Privacy Controls
Data classification policies
Restricted access to sensitive data
Information security training for employees
Network Security Controls
Firewalls
Multi-factor authentication
Data loss prevention
Privileged access control policies
Frequent cyber risk monitoring
Business Continuity/Disaster Recover Policies
Data backup policy, backup location
BC/DR Plans and Response times

Implementing these tools, policies, and procedures enhances security and demonstrates to the insurance provider that the organization takes data protection seriously and proactively.

What Cyber Insurance Covers: Key Areas of Protection

Every organization has unique needs, and cyber insurance is not one-size-fits-all. Corporations and agencies can build and customize their cyber insurance plan to suit their needs for safety and success while having access to a multitude of resources. Key areas of protection include:

Privacy and Security
Media
Regulatory Proceedings
Privacy Breach Notification
Computer and Legal Experts
Cyber Extortion
Data Restoration
Public Relations
Computer Fraud
Funds Transfer Fraud
Social Engineering Fraud
Telecom Fraud
Business Intervention
Dependent Business Interruption
Expenses Related to Reputation Harm

Coverage for Data Breaches and Cyber Attacks

With the security and resources of an insurance provider, organizations can better navigate the intricacies of a data breach or cyber-attack. Instead of the organization using its resources, money, and time to deal with an attack or breach, the insurance provider steps in. The insurance team can implement breaching coaches, technology specialists, legal workers, and anyone or anything else needed to retrieve the data and mitigate the complications and risks caused by the threat with greater efficiency.

Why Cyber Insurance Is Important for Organizations

Although cyber insurance is important for all organizations, those not prioritizing the protection of their technology and data may still see it as negotiable. Implementing the technologies and policies as a safeguard should be non-negotiable and must become part of your organization’s budget and insurance portfolio. While cyber insurance has become a more common adoption, it is a necessary practice to protect and future proof your organization.

Do You Need Cyber Insurance?

In short — yes. All organizations should obtain cyber insurance, as you never know when an incident will strike. To learn more about coverage plans and the requirements to qualify for the right cyber insurance for your organization, contact us below.