It is practically impossible to not have an internet connection. Both individuals and companies need to be online to reach out to customers. Moreover, it helps automate processes, store, and access data. Besides, since we’re so dependent on the internet, it also makes us vulnerable to cyberattacks.
Thus, corporations have developed a variety of defense strategies against cyberattacks. Moreover, a new sector is emerging whose efforts aim to lessen the effects of cyberattacks. This is the field of cyber insurance.
What is cyber insurance?
Cyber insurance, often known as cyber risk or cyber liability insurance, shields companies from the repercussions of cyberattacks and hacking threats. Even though companies are in charge of their cyber security, the correct cyber insurance can assist lessen the impact of any incident. Thus, it helps keep your company afloat.
The following are some of the cyberattacks that are most prevalent and to which you are most likely to fall prey:
- Malware: This malicious software can penetrate your systems and cause serious damage. It takes advantage of software flaws and phishing schemes to infiltrate your systems. So, once installed, the hacker has access to track your internet activity and take your data.
- Ransomware: Your computer becomes infected with ransomware, which encrypts your data. After that, the attacker demands a ransom payment in return for the release of the data. So, you should make a data recovery plan and maintain at least one data backup as a precaution.
- DDoS Attacks: Distributed Denial of Service occurs when someone attempts to obstruct regular server or network communication. The usual method for doing this is to saturate the target’s infrastructure with internet traffic.
Ransomware is the most frequent of these attacks. Hackers can ask for millions of Ransome through this. Therefore, it has the potential to be disastrous. So, to prevent businesses from having to pay ransomware settlements, cyber insurance is the solution.
What makes cyber insurance crucial?
A firm may experience negative effects due to the loss, compromise, or theft of electronic data. It can even include a reduction in income and client base. Moreover, people can hold businesses liable for losses brought on by the theft of third-party data. So, organizations must have cyber liability coverage to guard against the danger of cyber events.
Hackers exposed the personally identifiable information (PII) of 77 million PlayStation users. It happened in 2011 when they hacked Sony’s PlayStation Network. Moreover, users of PlayStation consoles were unable to access the service due to the vulnerability. And it resulted in a 23-day outage. Sony even spent more than $171 million on expenses because of the incident. However, a cyber insurance policy might have covered some of this expense. But unfortunately, Sony didn’t have one in place. Then, a court decision determined that Sony’s insurance policy only covered damage to physical property. This made Sony pay the whole cost of any cyber damages.
How does online insurance work?
Many of the same providers of business insurance also sell cyber insurance coverage. For example, E&O insurance, company liability insurance, and commercial property insurance. The majority of policies include first-party coverage. It applies to losses that directly affect a business. Moreover, there comes third-party coverage. This one’s applicable to losses incurred by third parties as a result of a cyber event or incident based on their commercial relationship with a covered entity.
Cyber insurance plans help cover the financial damages brought on by cyber attacks. Moreover, they include the costs of cleanup, paying for legal counsel, investigators, crisis communicators, and customer credits or refunds.
Reasons to buy cyber insurance
By protecting your company with cyber insurance, you can lessen the effects of the different cyberattacks. Here’s how:
#1. It saves you money
Compared to the expenses spent following a security compromise on your company, buying cyber insurance is more affordable. A notable illustration of such a scenario is the Sony PlayStation case we just discussed. The breach cost Sony more than $171 million in expenses. Sony would have been able to avoid some of these expenses, but Sony didn’t have insurance.
#2. Helps build customer trust
Customers will have more confidence if they are aware that you are capable of protecting your systems. Having cyber insurance will protect their information in case of an attack. Thus, they’ll be worry-free if you treat their information security seriously.
#3. Facilitates data recovery
It’s the responsibility of cyber insurance firms to restore your data when a cyber-criminal takes it away from you. Some companies even pay for the costs of the investigations. Other expenses include computer system restoration, reputation management, and extortion payments (in the case of ransomware attacks).
Using cyber insurance to protect your online activities
As more organizations come to understand its significance, the cyber insurance sector will expand by leaps and bounds. According to an IBM study, a data breach costs more than $4 million. Not many businesses can afford that. Moreover, even those that can, prefer not to bear the cost. Thus, you should get cyber insurance to safeguard your company.