What is Cyber Insurance, and do I need it?
The information age has brought with it some of the greatest advancements that humankind has ever witnessed. From gigantic medical leaps to a greater understanding of our fellow man, the Internet has transformed the way individuals and businesses alike operate.
Data has become king, but if the last 5 years have proven anything, it’s that data is never secure enough. Huge hacks to the likes of Sony, Siemens, PlayStation, the Department of Defence, TalkTalk and countless others have all made the news, damaging brand value, customer relations and resulting in huge amounts of money paid out.
That’s where cyber liability insurance comes in to play, but do you need it, and what does it cover?
Does my business need cyber insurance?
Today, it’s almost impossible for a business with an online presence not to rely on IT infrastructure to some degree. Businesses’ that do are exposed to the potential risks of business interruption, loss of income, equipment damage and possible reputation damage that can occur when your IT systems are damaged, interrupted or compromised.
It’s far from an academic exercise either, with a UK government survey estimating in 2014 that 81% of large corporations and 60% of small businesses suffering a cyber-data breach. Factor in an average cost between £600k to £1.15m for large businesses and between £65k and 115k for small and medium enterprises, and you begin to understand the risk that cyber-attacks pose to the viability of your business.
What does cyber insurance cover?
Whilst some existing policies such as commercial property, business interruption or professional indemnity insurance may provide limited cover against cyber-attacks, business are increasingly turning towards dedicated cyber liability insurance.
Typically, cyber liability insurance is split into two categories for first and third party risks.
First party insurance covers your businesses own assets, which may include:
- Loss or damage to digital assets like software
- Business interruption from network downtime
- Cost of cyber extortion should a third party threaten to damage or release data if they are not paid
- Reputational damage arising from a data breach
- Customer notification expenses in the event of a legal or regulatory requirement
- Theft of money or digital assets
Third-party insurance, on the other hand, covers the assets of others – most typically your customers. This may include:
- Security & privacy breaches, the following investigation, defence costs and civil damages associated with them
- Multi-media liability to cover investigation, defence costs and civil damages arising from defamation, breaches of privacy or negligence in publication
- Loss of third party data, including payment of compensation to customers.
With more and more businesses expanding their online presence, it will become increasingly important for companies to protect themselves in the virtual world.
If you feel that you may need to take a closer look into cyber insurance you can download our fact sheet below.