Cyber insurance has become an important resource for businesses of all types and sizes, with a wide range of potential coverage options. In this article, we'll discuss common insurance coverages so you can choose a plan that aligns with your specific business risks.
Before purchasing a specific cyber insurance plan, it’s a good idea to review important details regarding each area of coverage. Each plan may have a different structure of coverage that can be compared to the cyber risks identified during a company’s business continuity and IT security planning to ensure your business has adequate coverage for all potential cybersecurity risks.
Standard cyber insurance coverage supports first-party and third-party expenses. First-party coverage is related to the direct costs that a business incurs as a result of a cybercrime or data breach. Third-party cyber expenses may be incurred as the result of litigation that is initiated by other entities, often as the result of compromised sensitive information, and can include legal fees and regulatory fines. In this post, we’ll review the standard coverage options that a cyber insurance policy will provide.
There are a variety of potential cybercrimes and incidents that can cause direct or indirect harm to business operations. Coverage for cyber insurance is offered to address particular issues and costs that may arise after one of these events and help a business recover as quickly as possible.
Many times, when data is compromised during a cyber incident, it may impact sensitive customer or employee information. One example is data related to the Healthcare Insurance Portability and Accountability Act (HIPAA). A company has obligations related to state and federal regulations to notify and protect individuals whose data they access and process in the course of business. Expenses covered by cyber insurance that are related to affected individuals may include:
Reputational damage may also require time off for the purposes of identity recovery, which may be reimbursed in some cases. Additional support that cyber insurance can provide a business includes expenses related to hiring a PR firm and implementing improvements that may be recommended after an investigation.
The number of resources required to recover from a cybersecurity incident can be far-reaching and require third-party support. Cyber insurance coverage provides support for many important areas to assist a company in investigating, coordinating, and securing recovery services. These expenses may include:
There may also be additional services and expenses required to review information systems, prepare backups, and identify the exact scope of a breach.
Another major area of cyber insurance coverage involves potential litigation from third parties. There can be a wide range of liabilities that a company may be exposed to in a cybercrime or data breach event. Two of the most common categories of liability relate to network security and electronic media.
Cyber insurance coverage provides support in a number of different areas that may impact a business that has experienced a cybercrime or data breach incident. It may never be possible to prevent all forms of cybercrime, but supplemental insurance is an effective way to reduce risk and potential legal exposure. Understanding these types of coverage can help you select a policy and provider that match well with your cybersecurity and overall business needs.