April 13, 2018
Cybersecurity Insurance: How to Cover Your Business
by Michael Lamprecht, BigData Insure
With the constant barrage of cyber security breaches hitting the news every day, it should come as no surprise the latest cyber risk studies are projecting that nearly every small business will suffer a cyber security breach at some point.
According to the National Cyber Security Alliance, upwards of 60 percent of small- and medium-sized businesses that suffer a cyber security breach will fail within six months of the breach. Businesses that have a cyber security breach often fail because they lack the financial resources and expertise to recover.
Cyber risk insurance is designed to equip businesses with financial protection and expert resources to recover from cyber security breaches. Unfortunately, buying cyber risk insurance can be complicated. The coverage, rates and underwriting vary radically from insurer to insurer, which can make procuring the right protection a daunting task. Small businesses evaluating cyber risk insurance should consider the following:
Cyber risk insurance policies generally include coverage for third-party legal liability and first-party direct losses. Don’t try to navigate the coverage nuances yourself. Hire a cyber risk insurance broker and request help evaluating coverage for network security and privacy liability, media liability, data restoration expense, business interruption, extortion and fraudulent funds transfer. And ensure coverage applies to prior acts, outsourced systems, accidental events and rogue employees.
When selecting a limit, use the tools offered by your broker such as peer benchmarking information and cyber security breach calculators.
Insurers have minimum cyber security standards such as antivirus protection, firewalls, encryption, and backups. Make sure your business meets the minimum security standards before purchasing coverage.