How many times have you heard the phrase, “businesses of all sizes are facing a growing and ever-evolving threat from cyberattacks” and rolled your eyes? As a business owner, you’re already worried about other aspects of your business and your technology may not be at the top of your priority list.
However, cyberattacks are a real threat and that could destroy your business. In fact, a simple data breach in the U.S. costs an average of $9.44 million—the highest average cost in the world. If you experienced a data breach, could you pay this amount out of pocket? The truth is that most businesses, even big corporations, can’t pay that amount upfront.
That’s why cyber insurance coverage has emerged as a vital safeguard against cyber threats. In short, your business needs it and here’s why.
Common Types of Cyber Threats Businesses Face
As the reliance on technology grows, businesses will often eagerly jump to use technology. But technology is a Pandora’s box. The more we are online, the more businesses are susceptible to a variety of cyber threats.
- Phishing Attacks: Involves tricking employees into revealing sensitive information or login credentials through fraudulent emails or messages.
- Ransomware: A type of malware that encrypts a company’s data and demands a ransom for its release.
- Data Breaches: Unauthorized access to sensitive customer or company data that leads to potential financial losses and damage to reputation.
- Social Engineering: Manipulating individuals into divulging confidential information or performing actions that compromise security through psychological tactics, often exploiting trust or authority to deceive employees or users.
Understanding Cyber Insurance Coverage
Cyber insurance is a specialized insurance coverage designed to protect businesses from the financial losses and liabilities associated with cyber incidents. It provides a safety net for businesses that might otherwise struggle to recover from a cyberattack.
Cyber insurance coverage typically includes:
- First-Party Coverage: Reimburses the insured company for direct losses resulting from a cyber incident, such as data restoration costs, business interruption expenses, regulatory claims, and cyber extortion payments.
- Third-Party Coverage: Protects the insured against claims from customers, vendors, or partners resulting from a data breach or other cyber event.
However, qualifying for cyber insurance is not easy. Businesses need to show that they have robust security measures in place and meet compliance requirements. The more cyberattacks rise, the more risk cyber insurance companies incur. For example, as ransomware increased, the premiums of cyber insurance also increased 50% in 2022.
The Benefits of Cyber Insurance Coverage
Unfortunately, many businesses that experience a breach go out of business within 6 months. Cyber insurance could be the reason breached businesses keep their doors open after an attack. When a business qualifies for cyber insurance coverage, it has access to numerous benefits:
- Financial protection against cyber-related losses
- Coverage for data breaches and regulatory fines
- Assistance with incident response and recovery
- Safeguard business reputation and customer trust
Real-Life Case Study
One prominent example of the importance of cyber insurance coverage is the Marriott data breach in 2018. In this massive breach, the personal information of approximately 500 million guests was exposed. The incident resulted in a fine of $24 million by the UK’s Information Commissioner’s Office (ICO).
Without cyber insurance coverage, Marriott would have had to bear this significant financial burden alone and potentially experience a severe financial strain on the company. But to this day, Marriott continues to stand and thrive.
Assessing Your Business’s Cybersecurity and Insurance Needs
Cyber insurance is invaluable for companies. But to obtain coverage, businesses need to understand their cybersecurity first. Here’s how you can get started.
1. Evaluate Your Company’s Cyber Risk Exposure
To determine the appropriate cyber insurance coverage, businesses must conduct a comprehensive assessment of their cybersecurity risks and vulnerabilities. This evaluation should take into account the type of data stored, the industry’s regulatory environment, and the likelihood of cyber threats specific to the business.
Businesses can also partner with an IT provider to understand the vulnerabilities in their security. A provider like INSC offers crucial security tools like managed threat detection, monitoring and ransomware protection, network and data security, and more.
2. Identify Potential Coverage Gaps
Understanding the scope of coverage offered by a cyber insurance policy is crucial. Businesses should carefully review policy terms and conditions to identify any gaps in coverage that might leave them exposed to risks.
3. Consult with Experts for Personalized Advice
Working with experienced cyber insurance professionals can be beneficial in understanding the intricacies of policies and tailoring coverage to suit the specific needs of the business.
INSC: The Cyber Help You Need
As cyber threats continue to evolve, businesses must prioritize their cybersecurity strategies and consider investing in cyber insurance coverage.
At INSC, we are SOC 2 certified and have the expertise to help your business maintain compliance and enhance your cybersecurity posture. Our certification is a testament to our dedication for security. Together, we can increase your chances of qualifying for cyber insurance coverage. Contact us today and see how we can keep you, your data, and your business safe.