What to Look for in Cyber Insurance Coverage

In the modern day, attacks against businesses have evolved faster than ever before. Millions of dollars are lost every single year due to preventable cyber-attacks, resulting in not just lost money but also hindered reputations. While recovering the reputation of a business can be a long-standing challenge following a cyberattack, being made whole monetarily is possible through cyber insurance. Below, we’ll cover what to look for in cyber insurance coverage.

What is Cyber Insurance?

For those unfamiliar with the term, cyber insurance is a newer form of business insurance that generally covers your business’s liability in the event of a data breach where sensitive customer information or data may have been compromised or stolen. Oftentimes, businesses believe that their general liability insurance will cover this event, though that form of insurance only applies to bodily injury and property damage resulting from your products or services. This means that without adequate cyber insurance, your business will potentially be exposed to lawsuits and other troubles following a data breach.

Common Cyber Insurance Coverages

To put into perspective the breadth of cyber insurance coverage, it’s worth going over what exactly this type of coverage entails so that you know exactly what to look for. In most cases, basic cyber insurance coverage will provide protection against:

1. Network Security and Privacy: Should there be a system-wide failure of your networks and a data breach, cyber extortion, or general compromise occur, this type of coverage will compensate your business for legal expenses, data restoration, breach notifications, and more.
2. Network Business Interruption: Any losses incurred from security failures or system failures will be reimbursed under this protection.
3. Impending Media Liability: Any intellectual property infringement or advertising breaches that occurred fall under this aspect of cyber insurance.
4. Errors and Omissions: Finally, a cyber-attack may prevent your business from fulfilling an obligation or contract, in which case this type of cyber insurance will compensate you for the failure to meet the promise.

Key Factors to Consider When Choosing Cyber Insurance Coverage

As cyber insurance coverage has evolved in recent years, an increasing number of providers have also emerged offering the service. Given this, narrowing down which type of cyber insurance coverage is right for you is crucial. Look for the following factors when thinking about different offerings:

• Understand where the greatest amount of risk for your business comes from and determine which providers offer the most protection for that aspect
• Assess your business’s digital architecture to find weak points
• Choose a provider who has a lengthy list of positive reviews
• Choose a provider who offers many services so that you can scale your business’s protection as it grows
• Evaluate the cost of the insurance, along with the deductible, and weigh it against your current risk tolerance

How Much Cyber Insurance Coverage Do I Need?

As you consider what to look for in cyber insurance, you will undoubtedly begin to wonder how much insurance you need to stay protected. After all, most policies can range in coverage from $1 million to $5 million, though the upper range isn’t necessary for all businesses. First and foremost, when looking at what you’ll need, the average per record (customer) data breach in 2022 was around $165. A small business that only serves around 10,000 customers in the course of a year, assuming a 60% data breach or $990,000, might only need a $1 million policy to cover all of their bases.

However, larger businesses that service hundreds of thousands of customers in a year will likely need a policy that goes into the tens, or perhaps hundreds, of millions of dollars. To determine how much your business needs, take the per-customer loss value from the prior year and multiply it against your entire estimated customer count if you are looking to max out the coverage you have.

Conclusion

Keeping your business protected can feel exceedingly difficult in the modern day, with cyber-attacks coming from every direction. While preventing cyberattacks should always be your first priority, it’s impossible to stop every attack before it occurs. That’s why ensuring your business covers all its bases with cyber insurance is so important. Businesses can be denied coverage if they have a poor cybersecurity posture. With that said, if your business is in the Akron, Cleveland, or Columbus area and you wish to start learning how to better protect and manage your IT and digital services, contact us at Warwick right away.