To say that cyber security is important is an understatement. With how many people and businesses rely on Internet-connected systems nowadays, cybersecurity becomes a must. As private data often gets stored on these systems, a cyberattack can be more dangerous, especially when there are no systems in place to prevent such attacks and no way to cover the costs of the damage caused by them. Ensuring cyber security is a critical aspect of protecting digital assets, user data, and maintaining the trust of customers and stakeholders.
In these cases, it’s essential to have cyber security insurance. Lately, lots of businesses have considered this type of insurance to protect themselves and their customers. But is cyber insurance really worth the cost? Keep on reading to find out.
What Is Cyber Insurance?
Cyber insurance is a type of insurance that is meant to cover incidents related to cyber security. It’s not something that every business considers, and it will not always help fix all cyber security risks. However, it can be useful in the immediate aftermath of a cyberattack or data breach.
Cyber insurance can cover things like notifying customers, recovering lost data, fixing damaged equipment, and more.
The Different Types of Cybersecurity Insurance
When you consider cyber security insurance, there are two types of coverage that you can get, respectively:
This type of coverage serves to protect against claims filed by customers and different parties resulting from data breach or cyberattack. It can be very useful, as it covers breaches of contract or negligence claims, media liability claims, legal fines and fees that come from regulatory investigations, and consumer class action lawsuits or possible settlement funds.
With first-party coverage, you will be covered for the direct expenses that you are dealing with due to the cyberattack. You will be covered for:
- Damaged hardware & software replacement and reparations
- Credit monitoring for customers
- Extortion payments or ransomware
- Lost opportunities for business or business interruption caused by the network being down
- Legal expenses caused by the data breach
- Notifying customers and employees about the incident
How Much Does Cyber Insurance Cost?
There is no set cost for this type of insurance. However, you can easily estimate the price if you do some research.
Cyber insurance costs can vary by industry. For instance, for the financial services industry, the annual cost of cyber insurance is around $2,429, while other industries may have lower prices. The price may also be different depending on the state, though.
Is Cyber Insurance Worth It?
Whether you are considering cyber insurance or not, there’s one thing you should remember: it is not mandatory.
Alistair Vigier, the CEO of ClearwayLaw says that if you are the type of business that stores very sensitive data, a cyber insurance policy is worth it. This policy prepares you for responding to a cyberattack, minimizing losses, and making sure that you can get back on track as soon as possible.
At the same time, this policy should be paired with very strong security measures that prevent cyber attacks in the first place.
Cyber insurance may not look like a worthwhile investment for all businesses. However, if you want to be able to respond to an attack quickly enough, cyber insurance is extremely useful.