Everything You Need to KnowAbout Cyber Insurance

The world we live in is the world of the internet. Most businesses are conducted online. And when the pandemic came, businesses that were functioning offline also found a way to survive and thrive online. Many companies have even fully become online and closed down their physical offices. This is a testament to how important cybersecurity is. No matter how stringent your cybersecurity is, cyber-attacks are rampant and relentless. A 2021 study by Cisco found that 62% SMBs in India suffered cyber-attacks that cost them more than 3.5 crores. 13% SMBs claimed that they lost over 7 crores. (Source: Cisco).

With such a terrifying increase in cyber threats, insurance companies have started offering cyber insurance. Also called cyber-liability insurance, cyber insurance provides coverage for your business’ liability in case of data breaches, loss of sensitive information, and ransomware attacks.

Read on to find out more about cyber insurance.

What is Cyber Insurance?

Businesses often deal with sensitive information related to customers and other organizations. Losing that sensitive information to a malicious cyber-attack can result in significant financial loss, damage to the company’s reputation, and even trouble with the law. Cyber insurance comes in handy to financially protect yourself against this situation.

As mentioned above, cyber liability insurance provides financial protection to your business in case of loss and damage due to a cyber-attack. Depending on the type of coverage, it can cover the cost of lawsuits, compliance fines, and extortion payments. But cyber insurance is not only relevant for businesses. Individuals and families can also purchase it.

Why is it Important?

Standing today we cannot imagine a day without the internet and social media. Every day we share pieces of our lives online. Our accounts store everything – from our interests to passwords to sensitive information. For example, students are at a higher risk of viruses, cyberstalking and cyberbullying. Therefore, they can get specific cyber insurance for students .

Businesses rely on the internet for their businesses to function smoothly. While insurance cannot safeguard your data from cyber-attacks, it can reduce the financial burden you will face due to the losses.

For businesses, cyber insurance can help you deal with the aftermath of these three types of cyber-attacks:

• Identity theft: Identity theft is, unfortunately, extremely common. If hackers steal your customer’s data, it can put you in legal trouble. You have to pay for investigation, compensation and fines, and several other expenses. Insurance can cover these costs and help you stay afloat during stressful times.
• Ransomware: When hackers take control of your software and systems and threaten to destroy or leak your data for some demands, it is called a ransomware attack. You have to pay that extortion amount out of your pocket. Apart from financial loss, you also face loss of reputation. Cyber insurance can help you cover the cost of ransomware to a great extent.
• Credit card skimming: Credit card skimming is another common cybercrime. A data breach can also result in hackers stealing credit card information and committing fraud. Your business would have to pay for the loss to your customers as well as pay for the services required to fix the vulnerabilities. Under certain terms and conditions, cyber insurance also covers these losses.

Coverage Offered by Cyber Insurance

While buying cyber insurance, it is crucial to read the inclusions and exclusions of the policy carefully. While they differ as per the policies, typical inclusions and exclusions are as follows:

Inclusions

• Theft of funds: Financial losses occurring due to unauthorized digital transactions or physical transactions are covered by cyber insurance. This includes loss due to phishing, spoofing, fraudulent ATM withdrawals, POS frauds, etc.
• Identity theft: Insurance also covers legal costs and financial losses caused by misuse of your stolen identity. Some cyber insurance also covers the cost of psychological help for the victim.
• Hardware replacement: If your devices are affected during a cyber attack, cyber insurance will cover replacement or repair costs.
• Cyberstalking and cyberbullying: Cyber insurance also covers the legal costs, the cost of replacement and removal of offensive content, and mental health consultation costs for the insured. Social media liability: Sometimes, your social media posts can unintentionally violate privacy or copyright. In such cases, cyber insurance covers the cost required during legal proceedings.
• Cyber extortion: In cases of ransomware where you have to pay extortion or compensation, cyber insurance offers financial cover.
• Data breach liability: When your or third-party confidential data is breached unintentionally, the cost of legal proceedings is covered under insurance.
• Data restoration: Recovery of any data corrupted or lost due to a cyber attack is covered under cyber insurance.

Exclusions

Common cyber insurance exclusions are-

●  Loss due to electrical or mechanical failure

●  Losses due to intentional damage

●  Cryptocurrency related losses

●  Deliberately concealing important information while making a claim

●  Any legal proceedings or losses before the purchase of the policy

●  Loss because of online gambling

●  Damage because of using restricted websites

●  Cost of damage caused due to lack of safety measures and negligence

●  Any events listed in the policy terms

Things to Look for While Buying Cyber Insurance

Before buying cyber insurance, consider the following factors-

• Your cyber security: While buying cyber insurance is essential, it is not a preventative measure. Review your security procedures and systems. Many insurance providers require you to have basic security measures in place before they give you your insurance.
• Terms and conditions: Read the terms and conditions of the policy carefully. Check the coverage the insurance policy provides. Does the coverage meet your needs? Does it provide only third-party liability cover or also personal liability cover? Only buy the policy when it fulfills your needs.
• Different policies: Don’t settle on one policy. Look and compare policies offered by different insurance providers and choose the best option.

 With the current environment and our increasing reliance on the internet, it is crucial to safeguard our privacy and data. While cybersecurity can provide that security, cyber insurance can help you deal with unforeseen events.

Disclaimer:

The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.