The key reasons for adopting IT and cybersecurity liability policies
Insurance is a necessity for a lot of things in life, like car insurance or medical. But one area where insurance might become a new sector of importance is within the field of technology. While the past several years has seen larger companies take advantage of cybersecurity insurance policies, such a thing will normalize for a variety of reasons.
First, consider the building use and reliance on technology. Much of our lives are now integrated and reliant on tech in some capacity, for better or worse. Smartphones and laptops fill business and personal tasks, with integration into cloud and automated services. This is doubly important for companies of all sizes to provide a robust level of resources and keep up with production demands in today’s digitally driven world.
In other words, tech is used as widely as other aspects of our lives, if not more so. But just as we use it, so comes the danger associated with modern tech.
Today, malicious external threats are common. From ransomware to phishing scams, threat actors constantly seek ways to steal and compromise data, regardless of the target. Right now, online vendors and businesses are prime victims, since they contain extensive data caches.
Why get it now?
Aside from the factors discussed, there are other reasons to consider investing in a cyber liability policy. For example, as an industry, cyber insurance is still juvenile. Those who invest in a policy today are considered early adopters, which means you can experience a range of prime pricing models which may not be available in the coming years.
Furthermore, investing in a policy type can help future proof your enterprise model. Consider that, since suffering a cybersecurity breach or attack is a guarantee, rather than an exception. Given the cost and downtime associated with breach events, trying to survive on your own is increasingly difficult. As an SMB, for instance, you need every advantage available to you.
Remember, the “cost” of a breach even goes beyond financial damage. Brand reputation and customer trust are hurt when they no longer feel their information is safe with an enterprise. Investors may also feel shaken and take their capital elsewhere. Also, recovery takes longer than a few weeks. It’s often a months long process and requires rigorous analyzation of the how and why to prevent another malware attack.
Who needs cyber liability insurance?
If you’re an individual that’s occasionally dealt with a malware attack or phishing scam, you won’t need cyber insurance. But as a large enterprise, network, and/or business, you may need a policy.
Not all companies that handle data need one, but it’s important to take some things under consideration. For quick reference, recommendations for companies that benefit from a policy are as follows:
- Any company conducting transactions online via phone services, e-shops, and electronic payments
- Companies storing client and/or personal data that maintain personal details like bank information, home addresses, social security, etc
- Healthcare companies in compliance with HIPAA
Some other unconventional targets, like school networks, can benefit from a cyber insurance policy if they feel at risk.
What can I expect under insurance coverage?
Certain events and catastrophes are covered under a liability policy. However, it’s important to understand that this evolving market is as volatile and changing as cybersecurity. It can change on a monthly basis, so be aware ahead of time.
That said, some standard events and third-party attacks are traditionally covered by cybersecurity insurance, whether in part or fully. These are expenses related to things like data recovery and ransomware payments, varying based on the liability policy.
Those events and occurrence are as follows:
- An agreed ransomware payment after breach attack
- Legal fee amendments resulting from lawsuits after an attack (helping with legal expenses)
- Identity restoration costs
- Regulatory penalties involving HIPAA or PII
- Replacing damaged hardware and systems as a result of malware/ransomware
- Utilizing forensic services for data-driven breach analysis
The nuances of what is covered will vary greatly depending on the insurance provisioner, so know your agreement front to back.
What will a policy not cover?
No doubt, a cybersecurity insurance policy sounds practical in a time where data usage grows and threats against said data. But, like with all liability coverage plans, you should know what’s typically not covered.
Those fall under these categories:
- Previous breach events and other intrusions – think of it like a “pre-existing” condition for a business
- Internally caused cyber threats, such as attacks initiated by workers (not human error)
- Non-correction of known threat or liability
- Failure of a network infrastructure (such as failing HDD, servers, or hardware)
- Investment of improvements for a company is not covered
Do I need cybersec insurance?
As a general rule, we do recommend some degree of IT insurance policy. Even small businesses need to take careful considerations for the survival of their data. Also consider long-term planning. Technology isn’t going anywhere, and neither is reliance on it.
Given that insurance is flexible enough with different payment models and subscriptions, there’s a policy that can fit virtually any need. If the criteria discussed above is familiar to your organization, it’s time to consider cybersecurity insurance.