Many people don’t buy cyber insurance coverage because they think it’s too expensive. But according to Security.org, cyber insurance only costs around $500 to $5,000 per year while data breaches cost businesses over $3.5 million on average. Would you rather pay millions of dollars to get your data back or just invest in cyber insurance?
What Is Cyber Insurance Coverage?
Cyber insurance coverage protects businesses after financial and data losses due to:
- Ransomware attacks
- Data breaches
- Phishing schemes
- Network hacking
- Cyberattacks
- Human errors
Getting data back from cybercriminals typically comes at a cost. Nearly 60% of small businesses close within six months of a cyberattack when they don’t have cyber insurance. It costs small businesses $690,000 to recover for a data breach and mid-sized businesses more than $1 million.
Cyber insurance protects any business that stores personal or corporate data online, including:
- Credit card numbers
- Banking information
- Social security numbers
- Personal phone numbers and addresses
How Much Cyber Insurance Do I Need?
The cyber insurance you need depends on the size and industry of your business and the type of data you store. If you work closely with government agencies or store sensitive government data, you need a higher level of cyber insurance coverage than a small business that stores minimal corporate data.
Types of Cyber Insurance Coverage
There are two main types of cyber insurance coverage:
First-Party Cyber Insurance
First-party coverage helps insured organizations with data recovery costs to mitigate their losses and make them less detrimental. This type of insurance policy includes:
- Risk assessments to prevent future cyberattacks
- Reimbursements of lost revenue from data breaches and business interruption
- Investigation of the attack
- Financial assistance after a ransomware attack
- Communicating with affected customers
- Anti-fraud services for customers and employees
- Credit monitoring
- Executing PR and reputation/risk management
Typical scenarios where first-party coverage is beneficial are:
- During a denial of service attack
- After a storm/power outage damaged your computer hardware
- An employee accidentally erased important data
- Ransomware attacks
We recommend this insurance for small businesses that don’t store large amounts of sensitive customer data. This coverage doesn’t cover legal fees involved with customer data losses, so it suits businesses that store their own information. If you want to make sure your business won’t pay out of pocket for customer legal fees, liability coverage might be better.
Liability/Third-Party Coverage
Liability or third-party insurance covers third-party claims that your business is liable for a customer’s damage or data loss. Customers partner with you because they trust you, and data breaches harm that trust, even if the breach isn’t your fault.
Liability cyber insurance typically covers:
- Cost of defending lawsuits from affected third-parties
- Cost of court verdicts or settlements
- Defense litigation
This coverage suits businesses that store large amounts of customer data that want to avoid the legal fees associated with data breaches.
Which Cyber Insurance Coverage Do I Need?
We recommend all businesses have a cyber insurance plan in place, but you might not need both types, depending on your budget and needs.
Industries like IT, healthcare, government, and law enforcement need both types of insurance since they host large amounts of third-party data and need to cover all their bases. Smaller businesses just starting out should purchase first-party coverage but eventually may need to upgrade to a more robust third-party plan.
Cyber Insurance Requirements
Implementing cyber insurance is more than just purchasing a plan. Your business must meet certain standards before partnering with an insurance provider.
If you’re interested in purchasing cyber insurance coverage, you must:
- Have multifactor authentication in place
- Perform a security risk assessment
- Complete cybersecurity training
- Back up all customer and corporate data
Insurance providers require these steps be completed before you purchase a plan to ensure your business is a solid investment. Cyber insurance companies don’t want to do business with organizations that aren’t actively protecting their network.
What To Look for in Cyber Insurance Coverage
You want to find a cyber insurance plan that suits the needs of your business, keeps your data safe, and stays within your budget. When purchasing your cyber insurance plan, ask yourself the following questions:
- Does this insurance provider have a good reputation? Are they trustworthy and effective?
- What do I need covered? Do you want to cover loss of business, crisis management, or third-party claims?
- What type of data does my business store? If it’s primarily third-party information, then liability insurance is the best choice.
- Do I need to cover the costs of regulatory fines or penalties? If your business manages personal credit information or DSS, there are insurance plans that cover fines related to those data types.
- Does my business need credit monitoring?
- How often is your business interrupted by cyber issues/data breaches?
The above questions help you narrow down the provider and plan that suit your business best.
Need Help Finding a Cyber Insurance Plan?
G6 – Military Grade IT is here to help you find a cyber insurance plan that meets your unique needs. As cybersecurity professionals, we understand the complexities of data breaches, cybersecurity, and insurance, and we have the expertise it takes to find the proper plan.
We find cyber insurance plans for budgets and businesses of all sizes. We know which businesses require third-party coverage and can implement best practices to help you avoid data breaches. Our team also specializes in cybersecurity compliance and helps you meet the requirements of any cyber insurance plan you choose.
Contact us today to learn more about our cyber insurance coverage services and cybersecurity solutions.
