What is Cybersecurity Insurance?
Did you know 43% of all data breaches involve small and medium-sized businesses, yet 91% of small businesses haven’t purchased cyber liability insurance? Most every company faces some sort of cyber risk, no matter how big or small. Learn more about what Cyber Security Insurance is, how your business can benefit from it, and why it’s important to invest in it before disaster strikes.
What is Cybersecurity Insurance?
Cyber security insurance protects businesses against computer-related crimes, breaches, and losses. It can protect against targeted attacks like phishing (fraudulent emails) or malware (a file or code that infects a computer’s software).
The Three Main Types of Cybersecurity Coverage
Typically, there are three different types of cybersecurity policies; Cyber Security, Cyber Liability, and Technology Errors and Omissions. The first two deal with risk related to data breach, and the latter deals with damages caused by errors within a product or service sold to a customer.
Cyber Security Insurance has coverage for first-party damage to a business. It deals with immediate response costs related to data breaches, and not damage done to third-parties. This policy generally covers:
- Investigation of incident
- Risk assessment of future incidents
- Ransom attack payments based on limits
- Crisis management and public relations
- Lost revenue from business interruption
Cyber Liability Coverage includes liability for damages from a data breach. This type of insurance protects businesses that deal with third-party claims made against a business. Whether clients are individuals or other businesses, this policy offers coverage if their information is compromised in any way. This policy typically covers items such as:
- Legal defense costs
- Notification and Monitoring Expenses
- Settlements and court judgements
- Other court costs
Technology Error and Omissions
A Technology Error and Omissions (E&O) protects a business if it provides or sells technology services and products. This policy offers coverage if a product results in a cyber incident that affects a third-party directly. For example, this could cover graphic designers and advertising agencies who create digital content or computer programmers who create faulty code [for a website]. The difference between this policy and the others is if an incident occurred within your business or in a customer’s business due to an error on your businesses behalf. If a customer’s information is stolen from your computer, cyber security and liability cover it. However, if your business sells a product to a customer that has a coding error and their data is stolen from their computer as a result of the error, that’s when E&O coverage takes effect.
Is Cybersecurity Insurance Expensive?
Cybersecurity Insurance can be an affordable option for your business. Like most policies, there are factors that affect the policy cost, like:
- Number of employees
- Amount of sensitive data handled
- Coverage limits
- Your industry specifically
Unfortunately, it’s not a matter of if your business will experience a cyberattack, it’s a matter of when. If you have questions about Cybersecurity Insurance and want to explore your options, an agent at American Advantage – IFS will be happy to help. Call or message us today. (262) 696-5800