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Cyber Insurance: What It Is, What It Covers and if You Should Buy It

Cyber Insurance: What It Is, What It Covers and if You Should Buy It

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By Susan Hoffman
Contributor, InCyberDefense

Many businesses today have an online presence, involving assets such as company websites, blogs and social media accounts. However, these companies are also vulnerable to hackers looking to find valuable data, such as Social Security numbers and customer names, addresses and phone numbers.

If hackers find their way into company servers (onsite or in the cloud) and desktop computers, a major data breach could occur or company data could be held for ransom. The company must then fix the problem and is vulnerable to customer lawsuits and unpleasant news coverage.

To offset the high recovery costs of a data breach or a similar event, insurance providers commonly offer cyber insurance, also known as cyber risk insurance or cyber liability insurance coverage (CLIC).

What Does Cyber Insurance Cover?

A cyber insurance policy can cover damages relating to data breaches, identity theft, phishing or ransomware. Reimbursable expenses may include:

  • Forensic investigation
  • Business losses
  • Privacy and notification to customers
  • Lawsuits and extortion legal expenses

Many well-known insurance companies offer cyber insurance, including Liberty Mutual, Travelers, Chubb and American International Group (AIG). However, costs and coverage vary from one cyber insurance provider to another.

Benefits of Getting Cyber Insurance

Depending upon the size of your business and your budget, cyber insurance may be worth paying the premiums. More and more businesses are hacker targets, especially when hackers see an opportunity to gain money or capture data to be sold later through the dark web.

What to Look for in a Cyber Insurance Policy

Cyber insurance policies should be thoroughly checked to ensure that they provide the coverage your company needs. Also, look at other relevant factors such as:

  • Type of cyber insurance offered (standalone or extension of a current policy)
  • Options for customizing your policy
  • Cost of deductible
  • First-party coverage or third-party coverage
  • Types of attacks covered
  • Time limits on coverage

Although your company may not suffer a data breach, cyber insurance should be part of your organization’s risk considerations. The right type of cyber insurance policy could be cost-effective and alleviate some stress for the people at your company.

 

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