Cybercrime is a growing concern for companies, small and large alike. The levels of fraud and losses incurred to businesses across the U.S. and worldwide are continuing to pile up. According to the FBI annual report, the cost of cybercrime in the United States alone was $6.9 billion in 2021. With such high costs, cybersecurity insurance appears to hold significant value.
However, what many people don’t know is what exactly cyber insurance covers and how they need to stay protected. To read about what cybersecurity insurance is, what it does and doesn’t cover, and common misconceptions, read our latest blog post by clicking on the link below.
What Is Cybersecurity Insurance?
Cybersecurity insurance is a type of insurance policy that provides companies with a remedy and financial security against threats associated with doing business on digital platforms and changing regulatory environments.
Different Types of Cybersecurity Coverage
A cyber insurance policy can protect your business from various types of risks, including Network Security Coverage.
Network security insurance covers your organization’s privacy and information. This policy covers security failures like data breaches, business email compromises, ransomware attacks, and business email compromises.
It will also cover third-party costs, including credit monitoring, legal expense, data restoration, IT forensics, Identity restoration, breach notification to customers, and payment and negotiation costs.
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Privacy Liability
Businesses often handle highly sensitive data, and privacy threats have the potential to cripple even the most established companies. Information risks or data violations that expose your customer and employee data can leave your organization vulnerable to liability. Privacy liability insurance protects your company against liabilities to prevent you from incurring third-party costs.
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Errors and Omissions (E&O) Insurance
E&O insurance protects your company from cyber risks that prevent you from serving your customers and meeting your contractual obligations. It covers claims concerning errors and performance mishaps, such as consulting services, software services, and professional services offered by lawyers, engineers, or medical experts.
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Media Liability Coverage
This coverage protects your company from intellectual property breaches, excluding patent infringement. Media liability safeguards your company’s printed and digital advertising, such as social media posts.
What Cybersecurity Insurance Does Not Cover
Your cybersecurity insurance does not cover every possible cost and threat. Generally, a typical cyber insurance coverage doesn’t include:
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Potential loss of future profits due to opportunity cost or reputational damage resulting from a breach
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Technology upgrade costs for improving your IT systems after a cyber-attack or expenses to prevent the future event.
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Decreased valuation resulting from theft of intellectual property
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Lost revenue due to disruptions to production
Common Misconceptions
1. My general liability policy will cover my business
The fact is that your general liability coverage protects your company from property damage and physical injury claims and is not meant to cover the economic loss of a third party.
2. If my company is compliant, it’s safe
Maintaining industry compliance is necessary for any business and provides a baseline for security protocols. However, it does not cover you against cyber threats and attacks. For an effective cybersecurity program, you should aim at building a solid defense by improving your data hygiene and safeguarding important assets.
3. Only large companies are targeted by cybercriminals
Any company is a vulnerable target for cyber-attacks, no matter the size. Studies have shown that small businesses have been victims of these attacks, and about 60 percent of the hacked businesses collapse within six months.
Be Prepared to Get the Most Out of Your Cybersecurity Insurance
Good preparation is critical to achieving the ultimate protection your business needs from a cybersecurity insurance policy. You need to thoroughly assess your company’s potential vulnerabilities and current risk and claim exposure to second-party and first-party losses.
Gather crucial information about your organization, including the size of your company, industry of operation, annual revenue, and your products or services. This can help insurers understand the scope of your risk exposure and better develop a solution that meets your company’s needs.
Get in Touch With MAD Security Today
MAD Security provides industry-leading cybersecurity solutions that help strengthen your information security posture and drive your business forward. When integrated with a great cyber insurance policy, our result-driven solutions can protect and reduce cybersecurity risks while meeting regulatory compliance requirements. Contact us today to learn more about our cybersecurity services.
