What is Cyber Insurance and Its Importance?
Cyber insurance is typically a form of business insurance that helps organizations protect against potential losses caused due internet-based risks. Since different insurance players offer cyber risk insurance, their policies may differ in the scope of coverage and premium amounts depending on the plan that one opts for. Before we share the cybersecurity insurance selection tips, it is essential to know the benefits of buying one, in case your business is still uncovered.
- Protects against losses due to business disruption: In case of a cyber-attack, a cyber insurance policy can cover financial losses resulting from business downtime. It may also help compensate for costs to re-establish your systems to get them up and running again.
- Covers privacy breach costs: This policy helps cover expenses involved in managing privacy infringement claims, informing customers, and other related legal costs.
- Extortion defence: The threat of ransomware and cyber extortion is increasing; this insurance compensates the money paid as ransom or cyber extortion.
- Advice and expert support: Some cyber insurance policies may also provide cyber threat prevention support and improvements in IT systems.
Cybersecurity Insurance Selection Tips
Here we list some cybersecurity insurance selection tips to help you make the right buying decision:
The first step before you buy cyber insurance and the extent of coverage is to understand the cyber risk exposure of your business. This will help determine the kind of cyber insurance needed, the level of coverage required etc. You may assess the risks by asking questions which include the type of data stored, the risk faced by industry peers, the probability of attack, compliance issues (if any), etc.
Policy Terms and Conditions
Before you sign the dotted line, it is always advisable to carefully read all the terms and conditions, exclusions, coverage options and other aspects of the policy. Reading and understanding these terms may help you realise if the plan fits well with the level of risks and objectives. Also, some terms and conditions may vary amongst various insurers. This makes a valid point for comparing different policies.
One of the most important cybersecurity insurance selection tips includes updating the architecture and cyber hygiene of your system. Insurance underwriters usually check the measures taken by an organization to avoid any kind of cyber-attack. They take into consideration if the business uses unsupported versions of software or hardware, or the frequency of software and hardware update etc.
Risk v/s Premium
Like any other insurance, price or the premium play an important factor before buying the policy. Weighing the coverage needed, the risk you can afford, vis a vis the premium amount is very crucial. The premium amounts also depend on the existing security level and the steps taken to keep them in place.
Reviews and Industry Peers
Online reviews are the easiest ways to get first-hand knowledge about the product and how the users rate them. Before purchasing the insurance, have a look at the insurer's client base; it is important to determine certain facts. Try to consider: do they have clients from your industry, how are their after-sale services reviewed, are there any add-ons that are typically included, etc.?
The most dangerous thing about cyber threats is that they are not usually detected until they have occurred. Cyber insurance is no substitute for strong cybersecurity, the importance of having one is undeniable. Make sure you have a glance through the above-mentioned cybersecurity insurance selection tips before buying a policy.