Why You Need Cyber Insurance

It’s a hard truth that technology evolves too fast for data security to keep up. Cybercriminals have more ways to hack into businesses than ever before and are shifting their attention to smaller enterprises. Is your organization taking the right steps to protect its data?

Your Philadelphia IT services team at Menark have some tips for you to learn how cyber insurance can help mitigate the fallout from a data breach.

It’s Not Just Your Data

Depending on the scale of the breach and the whim of the hacker, the fallout can be devastating. Some criminals may return your data in return for a ransom, while others may simply do as they please with their ill-gotten gains. Your usernames, passwords, business secrets, and customer data could end up on the black market. The monetary and time costs of recovery could be monumental, and you may even face lawsuits from your customers and business partners.

Managing Your Risk

Cybersecurity is an element of risk that you can’t control. You can take steps to reduce your risk of getting hacked, but a criminal with enough experience, determination, and resources will find a way to succeed. Just as car insurance helps you recover from damage and theft, cyber insurance can help you recoup from a data breach. By buying a cyber insurance policy, you place the burden of risk on the insurance provider, ensuring that you’re not left high and dry if the worst happens.

What Does Cyber Insurance Cover?

Cyber insurance has yet to be standardized, and the rapid pace of technological innovation means that policies will continue to evolve. While coverages vary by provider, a reliable cyber insurance policy generally covers the following:

  • Financial losses, recovery costs, and disruption of operations
  • Cost of litigation
  • Ransoms paid to the hacker
  • Investigation of the data breach
  • Alerts to customers and business partners
  • Recovery of data and re-establishment of systems and networks
  • Hardware and software repairs and upgrades

Questions to Ask Cyber Insurance Providers

In addition to the above coverages, ask potential providers about the following:

  • Do you offer cyber insurance as its own policy, or as a bundle with general business insurance?
  • Does the policy cover damages that result from a breach affecting a business partner?
  • Does the policy cover services from third-party vendors such as managed services providers?
  • Are breaches due to accidental employee actions such as sending data to an imposter email account covered?
  • How elaborate are your coverages for phishing, ransomware, and social engineering?
  • How does your policy handle dormant breaches that aren’t discovered until months or even a year later?

Cyber Insurance Doesn’t Replace Cybersecurity

Having a cyber insurance policy is only one element of a complete cybersecurity plan. It is by no means a one-and-done solution. In fact, most cyber insurance providers will base their costs and coverage on the robustness of your existing cybersecurity measures. Just as being a safe driver will reduce the cost of your car insurance, implementing best data security practices will help you find a comprehensive, cost-effective cyber insurance policy.

Make sure everyone in your organization is on board with the latest established data security practices. This includes choosing strong passwords, recognizing signs of phishing and social engineering, keeping software up to date, and using encryption and multi-factor authentication. The more safeguards you implement, the better your chances of avoiding the most common types of data breaches.

Published By: Scott Clarke on September 5th, 2019