According to a report from IBM and the Ponemon Institute, the average data breach cost for businesses with fewer than 500 employees is $2.98 million.
The popular idea that cyberattacks target only large businesses has resulted in small to medium-sized companies across the globe being frequently at risk of a potentially crippling digital security breach. To combat this, businesses of all sizes should invest in additional protection of their sensitive data by acquiring cyber insurance.
From covering the costs of lawsuits and cyber extortion to offsetting the effects of a data breach, cyber insurance protects businesses against external threats. Read on for a complete cyber insurance overview covering the how and why of protecting organizations from digital attacks.
What is most at risk?
Today, cybercriminals are primarily interested in personal information. Social Security Numbers (SSN), credit card details, bank account information, personal names, and home addresses are all prime targets. From there, bad actors can use the information to easily access private information and potentially gain entry into the inner workings of a company’s digital infrastructure.
This is because businesses store most of their employee and client information in online databases. Cybercriminals can and will gain entry to these databases if they find any weak points, after which an organization could suffer critical losses and interruptions to its business.
How should businesses prepare?
Before investing in cyber insurance, a company should ensure a cyber security strategy is already in place. Taking the extra steps to do a risk assessment, develop a plan, and train staff can go a long way to preventing a cyberattack in the first place.
Additionally, when investing in cyber insurance, a business can position itself for the best coverage possible. Cyber risk insurers assess a company’s cybersecurity posture before offering policies. The better prepared an organization is, the more confidence an insurer will have, allowing them to make better policies available.
Businesses large and small should invest in training, cyber security readiness plans, and risk assessments to shore up any weaknesses in their defenses.
What should your cyber insurance overview cover?
Cyber insurance plans can vary and should be personalized to an individual business’s needs. When preparing a cyber insurance overview, companies should ensure their policy covers the following:
- Computer forensics
- Global cyber attacks
- Lost device coverage
- Assistance during a ransomware attack
- Theft of personal information
- Data breaches for third parties, such as vendors
Additionally, businesses should be confident in a provider’s ability to defend them in the case of a lawsuit or regulatory investigation. Checking to see if a hotline is available any time of the year can also make a difference in responding to a data breach quickly and effectively.
First-party and third-party coverage
Businesses must be knowledgeable about first-party and third-party coverage when building out their cyber insurance overview. The difference is the protection received:
- First-party coverage: With first-party coverage, protection is primarily focused on costs relating to a data breach. This could include legal counsel, replacing or recovering lost or stolen data, business interruption income losses, crisis management, and more.
- Third-party coverage: Third-party coverage protects businesses from third parties that make a claim against them. For instance, this could include when a vendor seeks a settlement for losses incurred due to a cyberattack.
Together, the two types of coverage protect a business against a sudden data breach and the potentially crippling costs associated with it.
Protect yourself with cyber insurance
Companies that have taken the time to prepare their organization against cyberattacks and have an in-depth cyber insurance overview are now ready to choose the best coverage.
McGowanPRO Information Security and Privacy Insurance provides various industry-leading coverages that protect businesses from emerging data security and privacy concerns.
- Information Security & Privacy Liability: Covering theft, unauthorized access, destruction of data, or unauthorized disclosure of non-public information (personal or third-party). It also covers a business that fails to comply with state breach notice laws, privacy policies, and government-mandated theft protection programs.
- Privacy Notification Costs: Coverage for costs associated with compliance with a breach notice law and the costs of hiring an expert to investigate a security breach.
- Regulatory Defense and Penalties: Covering the costs of defending a regulatory proceeding resulting from privacy law violations.
- Website Content Media Liability: Covering the display of electronic content on a business’ website. Offline media coverage may also be available.