Why You Need Cyber Insurance
Cyber insurance is no longer a “nice to have” commodity. Every SMB and enterprise must have cyber insurance. Besides the obvious reasons, it can also help remove the burden of a potential liability between a client, vendor, or third-party entity.
Most importantly, it can provide peace of mind in the event of a data breach.
Let’s pause for a moment here. No one likes to talk about data breaches until they have to disclose them publicly, but for many organizations, it’s a reality. If an attacker managed to gain unauthorized access and compromise systems or exfiltrate data, who’s to blame?
Hopefully, not you.
However, without proper cyber insurance coverage, your business might be fully liable for damages if your business data is compromised in any way. A long and painstaking process that can quickly deplete your budget in an instant. In this blog, we’ll highlight the importance of having cyber insurance and what to look for when choosing a provider.
The Financial Impact of Cyber Attacks and Ransomware
A recent survey revealed that 87% of global decision-makers said that their company is currently not adequately protected against cyber attacks. Cyber insurance helps ensure that businesses have a safety net in place to cover the financial repercussions of a security incident. It also helps organizations effectively address breaches, both in terms of financial and reputational damages.
Cyber insurance adds a security blanket to organizational risk management strategies, offering comprehensive coverage that extends beyond the immediate costs of a breach, but also in long-term support for recovery and compliance matters, which can be a very messy area.
Ransomware is a serious and expensive threat that many insurance providers do not cover. Sophos found that ransom payments have surged by 500% YoY to an average of $2M in 2023 alone. With ransomware attacks now taking on the form of AI, organizations will have to up their security and insurance game to avoid paying the hefty costs associated with these incidents.
The more pressing question is: Exactly how much of that $2 million is paid out of pocket?
This leads us to the important topic of what to look for when choosing a cyber insurance provider.
4 Things to Look for When Choosing a Cyber Insurance Provider
Incident Response Support: Every second counts after a breach or cyber incident has occurred. Does the policy include support for business continuity planning and disaster recovery? Does the insurer provide access to an incident response team and a crisis management team to guide you through the process? Check if the insurer offers credit monitoring services to help protect affected individuals from any further losses. Dedicated claim managers can also help streamline the entire process, from initial filing to final settlement. Get to know your team beforehand and make sure everyone is aligned with the direction. And last but not least, if you are covered for ransomware, who pays the ransom and waits for reimbursement? Is it you or the incident response team? Just something to keep in mind.
Claims Handling Process: Is the claim filing process a smooth and easy transition or do you have to wait weeks on end for an email or return call? Is the payout process transparent? Do you know how much your deductible is? What are you paying out of pocket, with one or multiple deductibles? Do your due diligence when it comes to this crucial step, particularly with payouts and response times. Businesses simply don’t have time to wait around and stop operations in the aftermath of a security incident. They need to focus their attention on immediate mitigation efforts. Understand how filing a claim might affect your future premiums or coverage. Some insurers might adjust premiums or terms based on claims history. Take the time to carefully review the fine print and details before submitting any claim.
Exclusions and Limitations: What’s included in the plan? Finding this out before you sign any contract is imperative. Make sure you thoroughly review the policy to understand any exclusions or limitations that could prevent you from signing on. Check for exclusions related to pre-existing vulnerabilities or ransomware payouts. Avoid any unpleasant surprises that can pop up later down the line, particularly in a potential breach lawsuit. You certainly don’t want to have to pay out of pocket for legal fees or regulatory fines that you assumed would be covered. Right?
Policies That Include Ransomware Coverage: According to the 2023 Ransomware Trends Report, 21% of organizations found out that ransomware is specifically excluded from their cyber insurance. Not exactly the type of coverage you should be seeking that will give you a good night’s sleep. However, it is not uncommon for insurance carriers to refuse ransom payouts for several reasons. The attack could have been preempted by the organization’s failure to maintain cybersecurity best practices, such as regularly updating and patching software, conducting routine phishing simulations, and implementing advanced security measures like intrusion detection systems. Don’t expect an insurer to provide you with ransomware coverage if you’re not up-to-date on security protocols and employee training either.
Another reason might be if a business failed to follow the insurer’s recommendations for risk mitigation. You can’t expect your insurance provider to hold up their end of the deal if you haven’t upheld yours.
Guardz Pro Tip: It’s important to check if there are any exclusions or caps on the amount that can be claimed for ransom payments.
And above all, make sure you go with a cyber insurance provider you can trust. One that will be there for you 24/7 in a crisis to help you recover and get business operations going.
Secure Your Digital Assets with Cyber Insurance from Guardz
Don’t wait until you’ve been hit with a breach to get cyber insurance coverage. Guardz enables businesses to secure optimal insurance coverage at the most competitive price. Every business is built differently. Guardz understands that and helps you get premium cyber insurance coverage tailored specifically to your business requirements. Whether you’re an SME or a Fortune 500, you must insure your digital assets to keep your operations running smoothly.
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Jordan is a Cybersecurity Content Creator and community builder. He has written for many cybersecurity companies and knows more stats about a data breach than IBM.