What is Cyber Insurance and Why is it Imperative to Protect Your Business?

Cyber insurance is a type of insurance that protects businesses from the financial losses and reputational damage caused by a cyberattack. Cyberattacks can include data breaches, ransomware attacks, denial-of-service attacks, and other malicious activities.

Cyber insurance is important for businesses of all sizes, but it is especially important for small businesses. Small businesses often have fewer resources to devote to cybersecurity, and they may be more likely to be targeted by cybercriminals.

Cyber insurance is no longer an optional choice. Now, it is imperative for your company's survival in the event of a cybersecurity event.

3 Accessibility description: Chart includes yearly and aggregate data for complaints and losses over the years 2018 to 2022. Over this time, the IC3 received a total of 3.26 million complaints, reporting a loss of $27.6 billion. * Please see Appendix B for more information regarding IC3 data.

Cyber insurance policies typically cover a variety of expenses, including:

  • The cost of notifying customers and other affected parties of a data breach
  • The cost of investigating and responding to a cyberattack
  • The cost of restoring lost or damaged data
  • The cost of defending against lawsuits arising from a cyberattack
  • The cost of lost business income due to a cyberattack

Some cyber insurance policies also cover additional expenses, such as the cost of public relations services and credit monitoring for customers who have been affected by a data breach.

Why is cyber insurance important?

Cyberattacks can be costly for businesses of all sizes. The average cost of a data breach is $4.24 million, according to IBM. Cyberattacks can also damage a business's reputation and lead to lost customers.

Cyber insurance can help businesses to recover from a cyberattack and minimize the financial and reputational damage. Cyber insurance can also give businesses peace of mind knowing that they are protected from the financial risks of a cyberattack. What your cyber insurance policy does and does not cover could be the difference in your business surviving a cybersecurity event.

How to choose a cyber insurance policy

When choosing a cyber insurance policy, it is important to consider the following factors:

  • The size of your business
  • The type of industry you are in
  • The types of cyber risks you are most exposed to
  • The amount of coverage you need
  • The cost of the policy

It is also important to read the policy carefully to understand what is covered and what is not covered.

For example: According to the IC3 2022 Internet Crime Report, they received over 21,832 Business Email Compromise complaints with adjusted losses over 2.7 billion. Business Email Compromise or BEC is one of the largest current cybersecurity threats. Don't assume this and other threats are covered simply because you purchased a cyber insurance policy. Perform your research and due diligence when getting quotes for a policy and verify your company will be covered in the event of such an attack.

If you are unsure about what type of cyber insurance policy is right for your business, you should consult with an insurance broker who specializes in cyber insurance.

Another simpler option is to Hire Vector Choice, a reputable managed IT service provider, to help you implement robust cyber insurance and cybersecurity solutions. If you are interested in more information on cyber insurance or are ready to begin the process of protecting your business, please click here!

Cyber insurance is an important tool for businesses of all sizes to protect themselves from the financial losses and reputational damage caused by a cyberattack. If you do not have cyber insurance, you should consider purchasing a policy to protect your business.

Cybersecurity Tech Tip