The Cost of Cyber Attack: Why Cyber Insurance is Essential in India?

Cyber security insurance or cyber liability insurance is a contract between the insurer and the insured. An entity can subscribe to a cyber policy in order to reduce the financial risk it may face due to a breach of data. Further, an organisation may comprehend the cost of cyber attack on the basis of the valuable data and information it possesses.

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Cost of Cyber Attack

Cyber insurance is an emerging industry. An industry that subscribes to such insurance can be regarded as the early adopter. It is fluctuating and dynamic in nature. In the past few years, several companies endeavoured through cyber threats. The threats compromised the companies' data. This made them appreciate the importance of insurance policies and the cost of cyber attack.

Let us discuss the cost of cyber attack in detail.

Several people are associated with a company. For example, an organisation that provides services to customers at large is expected to store the data of millions of users. In addition, the company owns a social and legal duty to keep such information of users safe. 

A third party may sue the company based on a breach of data by hackers or the company per se. Therefore, the organisation is required to pay special heed to such concerns. Further, it must protect the data of users to lower the risk and evade lawsuits by a third party. 

There have been several cases recorded in the history of data breaches. Such incidents made the companies understand the cost of cyber attack. 

Let us see such incidents in the following case study.

  1. The NASA Cyber Attack Case

    A 15-year-old boy name James Jonathan successfully hacked the computers of NASA for more than 20 days. He shut down their devices, which resulted in downloads of around 1.7 million software. It cost the space giant $41,000 in order to repair the devices. The incident took place in 1999 and NASA understands the importance of cyber security policy. 

  2. Sony PlayStation Network Case

    The online video games of Sony faced a massive breach in security. The cyber theft breached the data. It successfully stole the name, address, and credit card details of 77 million users. The users were expected to provide their details in order to enjoy the PlayStation games. 

    Upon the incident, Sony realised the theft of user data which compelled the company to shut down the PlayStation network. In addition, the company divulged the breach of data late to the public. 

    Further, the users were not allowed to browse or download Sony's games. Due to shut down of the network, the user could not play the games over the internet. The breach caused the goodwill of the company in the market to decrease. Several users shifted to other online games. In addition, the cyber attack lasted for 23 days which caused a loss of $171 million to the company. 

    The loss incurred by Sony in the cyber attacks could have been recovered if it had subscribed to a cyber insurance policy. Unfortunately, the company never subscribed to such a policy. However, the company instituted a lawsuit with regard to other insurance it had. Nevertheless, the court rejected the plea on the ground that the insurance policy was only subject to physical property damage. Hence, the company incurred a heavy loss in cyber damages.


The Adobe cyber attack and Yahoo cyber attack cases are two of the most famous incidents in history. Adobe lost the credit card details of 2.9 million users. At the same time, 500 million accounts were compromised when the cyber attacks on Yahoo. In 2015, Ukraine's power grid also faces a cyber attack. It resulted in the power loss of several homes for a few hours. Therefore, companies must subscribe to cyber insurance in order to protect the data of the users and companies.

Written By: PolicyBazaar - Updated: 20 March 2024
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Policybazaar for Business - Cyber Insurance - Customer Reviews
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4.3 October 11, 2022
Aarti Singh
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Paperless Process
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It was easy to buy insurance from Policybazaar and customer support was also amazing to clear all the doubts. Contractual liability insurance is essential for my business and I could not get a better deal than this.
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An ideal Contractual Liability Insurance policy purchased to protect our business that we ecounter in our everyday operations. Policybazaar offers a platform to compare multiple plans.
4.5 September 30, 2022
No Broker And Paper Work
Great experience at Policybazaar. We did not know that buying Contractual Liability Insurance could be that easy. Also there is no broker and paperwork.
4.8 September 29, 2022
Perfect Insurance Coverage
I purchased Contractual Liability Insurance from Policybazaar and the coverage they provided is perfect to keep my hardware business safe various unforeseen instances.
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4.5 March 18, 2022
Cloud Storage Cover
I wanted to purchase a cyber insurance policy could provide coverage for the data stored in cloud network. I went on the Policybazaar website and look up for plans that would provide me with this coverage. I compared different plans and in a matter of minutes i found the right cyber insurance plan that would fit my requirement.
4.5 March 17, 2022
Good User Interface
I was looking for a cyber insurance policy online. After looking for the insurance plan online I landed on the Policybazaar website. Trust me, the user interface of the website is so good that i was able to locate the cyber insurance plan and purchase it in not more than 10 minutes. Thanks Policybazaar.