Although relatively new, cyber insurance policies are quickly becoming an essential part of a comprehensive protection plan for businesses of all sizes.
However, not all cyber insurance policies are created equal, and there are several different areas they may or may not cover. If you want to be sure you have the appropriate coverage for the level and type of risk your business faces, it’s important to understand where that risk comes from and what your policy will address.
Types of Coverage
In general, cyber insurance covers either first party losses, third party liability, or both. First party coverage will apply to losses your business suffers as a result of a breach. If your customers’ data is compromised and you are liable, the third party coverage will kick in. Since this type of insurance is so new, there isn’t a standard set of items either of these coverages always apply to, so it’s important to study the terms of your policy carefully.
What you want to see is coverage that includes the cost of notifying customers affected by the breach, crisis management and public relations, forensic investigations into the cause of the breach, and credit monitoring of affected customers. Depending on the size of your company and the number of customers you have, you may also want to include the cost of setting up call centers to handle customer inquiries.
Evaluating Your Risk
In order to ensure you acquire an adequate level of coverage, you need to accurately asses the cost to your company in the event of a breach. This estimate should include all of the items outlined above, as well coverage to pay for any losses due to business interruption and a legal defense.
You also need to make sure your policy doesn’t exclude breaches brought on by activities that are part of your regular business, such as international transactions.
There are also things you can do to lower your risk of exposure to a breach, and this will help keep your premium costs down as well. These include instituting a thorough training system for your employees on how to handle sensitive company and customer data, installing digital protections like firewalls and anti-virus software, and ensuring that each employee only has access to the information they need to do their job and no more.
Because the nature and sources of cyber attacks that can lead to a data breach are evolving constantly, you need to remain vigilant as well. Periodically reevaluating your risk and coverage options is an important part of keeping your company protected from these types of damages.
The relative newness of cyber insurance policies also means that more and more companies will begin to offer them in the near future, giving you a wider variety of options to choose from, which is another reason to check back on the status of your policy from time to time.
If you’d like to learn more about the cyber insurance policies we offer and what they can do to help protect your business, contact our offices today.