Cyber liability insurance is a must for modern businesses. Large and small businesses alike are more reliant than ever on computers, mobile devices, and cloud-based services to operate. And with increased technology use comes the risk of online threats and data breaches.
That’s where cyber liability coverage comes in. This specialized form of insurance is uniquely designed to help protect businesses from online threats and the risks that potential data breaches pose.
Of course, not all cyber insurance is created equal. Read on to learn more about the different types of cyber insurance so you can protect your businesses from potential threats.
The Basics of Cyber Insurance
Simply put, a cyber liability policy can help protect your business if it falls victim to a data breach, ransomware, phishing attack, or even a password attack.
Cyber attacks are undeniably expensive. According to the latest data from IBM, the average total cost of a data breach in 2022 reached $4.35 million. The right cyber insurance can help businesses bounce back by covering a variety of expenses associated with a cyber attack.
Cyber coverage is a form of insurance that most businesses should have today. Organizations that rely on sensitive data or customer data should prioritize this type of coverage.
Incident-Specific Cyber Insurance Coverages
Before learning more about the types of cyber insurance, you need to understand the incidents it can protect your business from. This coverage offers a variety of protections against emerging online and data-related threats, including:
Data breaches
According to TechTarget, a data breach is a cyber attack in which sensitive, confidential, or otherwise protected data has been accessed or disclosed in an unauthorized fashion. A breach is commonly a result of weak or compromised passwords, malware, or phishing schemes. They are incredibly costly and can leave a business vulnerable to lawsuits.
Hacking attacks
These types of incidents are more direct and targeted. Malicious actors are on the offensive to hack into a specific computer network or system. They may use more sophisticated tactics to hack into a business’s software and wreak havoc.
Once a bad actor gains access, they may remain undetected collecting data or acting swiftly to hold systems ransom.
Phishing scams
This type of social engineering attack remains popular among cybercriminals. By exploiting human vulnerabilities, they can gain access to passwords and internal systems. Phishing emails are the most common; however, criminals are also using texting and other methods to impersonate and deceive employees.
Malware and ransomware attacks
Ransomware attacks are also becoming more common. CISA explains that ransomware is a form of malware designed to encrypt files on a device, rendering any files and the systems that rely on them unusable. Bad actors then demand ransom to give them back. Some cyber risk insurance policies provide protection from this type of threat, but not all do yet.
Insider threats
Many businesses overlook insider threats. Your employees are trusted with confidential information, passwords, and access to data at your organization. If they become disgruntled, they may cause damage to your data or share information maliciously.
Insider threats can also be accidental. Some employees may not know how to spot a phishing scam or share data over unsecured networks that can compromise data.
Physical damage resulting from cyber events
While many cyberattacks target software and data, they can cause damage to physical property. Some threats can leave hardware systems useless and in need of replacement. In more extreme cases, hackers may gain access to control equipment that can lead to property damage or even bodily harm.
Business interruption due to cyber incidents
Cyber incidents can cause business interruptions, regardless of their size. Successful attacks can cause a business to pause operations while they clean up the pieces, meaning they lose revenue. Similarly, the damage to their reputation can have an effect on their bottom line as well.
Even if a cyberattack is unsuccessful, the threat can cause a business to take pause to reevaluate its security measures.
Types of Cyber Insurance Coverage
Now that you know the variety of incidents cyber insurance can cover, it’s time to take a closer look at the types of insurance coverage your business needs. The Federal Trade Commission (FTC) explains that businesses will have to choose between first-party coverage, third-party coverage, or both.
Here is a breakdown of these types of cyber insurance.
First-Party Coverage
According to the FTC, this type of coverage protects your data, including employee and customer information. First-party coverage includes:
- Network security and privacy liability
- Electronic media liability
- Business interruption and extra expense
- Cyber extortion
- Digital asset restoration
Essentially, this type of cyber insurance covers any of the business’s costs related to the cyber attack. From legal counsel and public relations to recovery and forensic costs, it’s a critical type of coverage to protect a business’s financials in the event of an attack.
Third-Party Coverage
On the other hand, third-party coverage protects you from liability if a third party brings claims against you. Businesses have a duty to protect their customer’s information. When a data breach occurs and personal information becomes compromised, customers and clients may have the right to file a lawsuit.
This coverage includes:
- Network security liability
- Privacy liability
- Media liability
More specifically, this type of cyber insurance may cover payments to consumers affected by the data breach in addition to claims and settlement expenses. Having this coverage ensures your business is protected from third-party liability should a breach occur.
The Best Cyber Insurance Policy for Your Business
Make sure your business is equipped with the right types of cyber insurance for your needs.
At World Insurance, our experts can explain the nuances of cyber liability coverage in more detail and provide you with a custom quote. Cyber liability insurance is inexpensive compared to the cost involved with fixing a breach. And in today’s digital age, you don’t want to be caught without cyber protection.
Learn more about your options for cyber liability insurance.