Cyber insurance reflects modern technological innovation and the growing need for cybersecurity. Cybercrime costs small and medium businesses more than $2.2 million a year, and there was a 424% increase in new small business cyber breaches last year.
When comparing all of the small businesses that are victims of a cyber attack, 60% do not recover and go out of business within six months. Does this mean that today’s individuals and businesses need cyber insurance? This article will define cyber insurance, explain if cyber insurance is necessary, and suggest where you could purchase cyber insurance.
Cyber Insurance and Cyber Security: What Is It and Do I Need It?
Cyber insurance works like most insurance policies: it covers costs and damages, specifically those resulting from a data breach. Businesses would face liability from a data breach if they accidentally leaked data that contained sensitive customer information. Cyber insurance can protect companies from paying excessive penalties and legal fees.
Many conflate cyber insurance with cybersecurity, but the two differ in distinct ways. Cybersecurity prevents data breaches in the first place and protects companies, institutions, and individuals. By no means is this an exhaustive list, but people are more secure on the internet if they employ comprehensive security methods, such as using a VPN to encrypt sensitive information.
Another tactic people can use to stay safe on the internet is being on the lookout for phishing emails. But if you want more robust cybersecurity, try Agency — the only cybersecurity provider of Next Gen Antivirus and active 24/7 security monitoring for retail customers.
Is cyber insurance necessary for myself or my business?
Cyber insurance is a relatively new field, and those who purchase it are considered early adopters. Since it is so new, the policies tend to change as a reflection of the ever-shifting nature of cyber-risks. Insurance companies formulate cyber insurance policies with a minimal amount of data (since the product is so new) compared to typical insurance plans.
Cyber insurance as a purchase does not seem to be an absolute necessity and would not be maximally effective for individuals or businesses without cybersecurity measures in place. However, the growing need for cyber insurance is clear. Sony once had to pay over 171 million dollars after a data breach because the company did not have a cyber insurance plan.
What does cyber insurance coverage include?
- First-Party Coverage: This coverage includes the costs of mitigating losses resulting from a data breach or other cyber attack.
- Third-Party Coverage: This coverage includes the cost to defend your company from liability claims, fees, or penalties levied by regulating authorities due to a data breach or cyber-attack.
- Cyber Crime Costs: This coverage includes the cost of financial losses that result directly from criminal activity.
Is cyber insurance or cybersecurity expensive?
A recent study calculated that the average cost of cyber insurance was $1,485 per year in 2020. Factors like the size and industry of your company, the sensitivity of the data that your company collects, and the strength of your cybersecurity all influence the cost of cyber insurance.
43% of cyber attacks target small businesses, and this statistic is expected to grow due to larger businesses increasing their cybersecurity. That’s why all companies must invest in comprehensive cybersecurity as the first step to protection before considering cyber insurance. In fact, the cyber security company Agency offers cyber insurance alongside its comprehensively managed response plans.
Where could I get cyber insurance or cybersecurity?
The first step to obtaining affordable cyber insurance is purchasing cybersecurity. Cyber security prevents these cyber attacks from occurring and lowers the cost of cyber insurance. Most cybersecurity companies do not offer coverage for cyber incidents.
Still, Agency is the first to stand behind its protection with over $1M of coverage, backed by two major insurance carriers. By signing up for the newsletter, you could receive a free one-month trial.
In all, it’s wise to prioritize cybersecurity before insurance coverage when protecting your business and yourself from the damages of cyber attacks.