Cyber Insurance

What is Cyber Insurance?

Cyber risk insurance policy is an emerging insurance for cyber attacks in the insurance market due to evolving technology and the increase in the usage of online services by almost every organization or business. Given the fluctuating nature of cyber risks in the market, the insured can enhance the coverage as per their requirements.

Why is Cyber Risk Insurance Important?

Cyber risk insurance becomes a necessity as various organizations rely on Internet-based technology to reach out to their prospective customers and pursue their digital marketing goals. All digital tools expose these organizations to the risk of cyber threats.

Cyber insurance for corporates protects the company from the loss caused to first-party and third-party liabilities resulting from cyber-attacks and leading to financial & reputational losses. It offers insurance protection to corporations against cyber extortion, unauthorized access, data breaches, etc. to secure sensitive customer personal information and employee data.

Since data security is one of the primary responsibilities of companies as they have access to their customers’/users’ confidential information. It becomes a priority for the Small and mid-size companies that are struggling to grow in the market should purchase this policy to protect their customer information.

For example, Sony’s PlayStation Network was breached in 2011. In this cyber breach, personally identifiable information of over 77 million user account were compromised. After this breach, PlayStation users were not able to access the online services and it lasted for 23 days. 

Sony had to face a loss of around $171 million and since Sony did not have cyber insurance in place they could not get any kind of coverage. The issue was taken to the court and the court ruled out that the insurance plan that Sony had only covered the physical property damage only.

What is Covered in a Cyber Insurance Policy?

Cyber liability insurance provides coverage for the following condition:

What does Cyber Insurance Not Cover?

Cyber insurance does not provide coverage for the following:

• Bodily injury, diseases, death or damage to any tangible item is not covered
• Electric disturbance, mechanical failure, breakdown of any kind or media failure that led to any kind of loss
• Any willful or fraudulent act of any law, rules or regulation by an insured
• Damages caused due to negligence or lack of precautions to safeguard information such as credit and debit cards, bank accounts, internet connections, etc.
• Deliberately ignoring any knowledge or circumstances that may become a basis of a claim
• Ongoing legal proceedings before the policy was purchased
• Unexplained loss, or any loss due to a government order
• Losses due to participating in any malicious or dishonest activity
• Breach of trade secrets, trademarks, registered patents, actual or alleged plagiarism, copyrights or other intellectual property
• Consequential loss or damage is not covered, including the loss suffered by any third party
• Any legally uninsurable matter
• Loss in value, theft or disappearance of cryptocurrency is not covered
• Loss of any tangible property
• Purchase of sovereign funds, dealing in securities, federal fund, foreign exchange, currencies and commodities are not covered

Who Needs Cybersecurity Insurance?

Businesses and organizations that have data stored online whether it is their customer’s data such as credit/debit card details, PII, contact numbers, email IDs or their own confidential data are suggested to purchase cyber liability insurance. 

A cyber insurance plan is beneficial for e-commerce businesses as cyber attacks can lead to loss of customers and sales. Similarly, companies that store customer information on their websites can purchase and get cyber coverage.

How to Raise a Claim Under Cyber Insurance?

Follow the below-mentioned steps to raise a claim under cyber insurance:

Step 1: Claim intimation: Insured need to notify the insurer as soon as they become aware of any cyber incident. Some insurers have tie-ups with third-party cyber security service providers to raise the claim.

Step 2: Investigator is assigned: An investigator is assigned to the incident analysis including severity and a temporary resolution plan is chalked out. Turn around time for this is 4-5 hours tentatively. 

Step 3: Cyber Expert is Hired: If the incident is severe a cyber expert is hired to do the incident analysis. This cannot be done by the in-house cyber experts to keep transparency and avoid biasedness.

Step 4: Internal liaisoning: All concerned parties engage in a discussion on the resolution including the insured. Then the insurer takes policyholder's 2nd opinion on potential costing for the loss sustained by the insured. If a cost-effective option is available, the insurer takes it. At this point, the final plan of action is drawn.

Step 5: All details are re-reported to the claiming team. The claiming team reviews all the details and considers it for a final approval post which the expense is paid out.

NOTE: It is the responsibility of the insured to not withhold any information which the insurer may deem relevant to be shared for a claim. Failure to do so may result in denial of the claim or delay.

How to Choose Cybersecurity Insurance & How Much Does It Cost?

Cybersecurity insurance is an important investment for any company looking to protect itself from the risks associated with cyber-attacks. To qualify, organizations must pass inspections by IRDAI and provide documentation about their security measures that meets government standards in order to receive coverage. 

Once the security audit is completed, the insurer will tell about the insurance coverage the company is eligible for along with the premium amount that the organization will have to pay for it. Since the concept of cyber insurance is new and companies have recently started adopting it, the premium amount varies from one company to another.

How to Renew Cyber Insurance?

To renew your cyber security insurance coverage, follow the below-mentioned steps.

Step 1: Visit the Policybazaar Insurance Brokers Private Limited website.

Step 2: Fill in your policy number to access your account.

Step 3: Now locate the “Renew” button on the website page.

Step 4: You can also add or remove any add-on as per your requirement before renewing your cyber insurance plan.

Step 5: The premium amount will fluctuate as per your addition or removal of the add-on.

Step 6: Then click on the “Renew” button.

Step 7: Now you can make the payment using debit/credit card, UPI or net banking as per your convenience.

Step 8: Once the payment is completed, the insurer will send the updated policy documents to your registered email ID and a hard copy to your registered address.

To avoid the cancellation of the policy, make sure to renew your cyber security insurance on time.

Tips to Enhance Cyber Security

Mentioned below are some of the tips to enhance cyber security and effectively prevent cyber risks under cyber crime insurance:

• Follow effective cyber security measures. Instantaneously respond to threats and stop it then and there with an appropriate anti-malware.
• Allocate cyber insurance costs in your company’s budget.
• Enhance cyber security expertise and take measures to bolster security.
• Ensure security and productivity by providing employees with devices that they know how to operate and function.
• Boost security measures with an adequate cyber insurance policy to ensure smooth business operations.