Small businesses face a growing challenge in securing their data and operations in today's digital age. The prevalence of cyberattacks highlights the importance of an effective cybersecurity strategy. Essential elements include firewalls, data backups, and regular cybersecurity awareness training for employees. However, a holistic approach should also consider cyber insurance. This financial instrument provides an additional layer of protection in the event of a cyberattack, helping businesses recover from financial losses and minimize operational disruptions.
What is cyber insurance?
Cyber insurance, also known as cyber liability insurance, is a form of insurance that specializes in damages a business incurs due to cyberattacks or data breaches. It can cover losses because of the cyberattack and costs pertaining to the recovery process. By integrating cyber insurance into their cybersecurity strategy, businesses can significantly reduce their overall cyber risk profile.
How cyber insurance benefits your business
There are many advantages to implementing cyber insurance, such as:
Financial loss coverage
Cyber insurance provides valuable financial protection that covers various forms of financial loss, such as legal expenses from customer and employee lawsuits following a data breach, regulatory fines, and loss of income due to downtime. However, you should always check what forms of loss your cyber insurance provider actually covers and to what extent.
Ransomware payment assistance
Consider the unsettling scenario where a cybercriminal uses ransomware to obtain critical data such as your employees’ Social Security numbers or your clients' credit card details. Recognizing the potentially devastating impact this could have on your business, you're prepared to spend whatever is necessary to avert such a disaster. However, the amount demanded in the ransom can be steep, and meeting it could have consequences further down the line, such as being unable to purchase assets necessary for growth. Luckily, cyber insurance can assist in covering the costs of such demands.
Notification costs support
In situations where customer information does get stolen, your business has a legal obligation to inform your customers. You may also need to inform your suppliers, business partners, and stakeholders. Depending on the number of notifications and the geographic range of your business (local, regional, national, or international) this can incur significant costs. Fortunately, cyber insurance can potentially help cover the costs of your notifications.
Data recovery services
Should your business find itself the victim of a data breach that has corrupted or destroyed your data, it becomes essential to restore what has been lost. Depending on your coverage plan, your cyber insurance provider might cover the cost of data recovery services. Without the specialized tools and expertise these services provide, recovering your data can take years.
How to get cyber insurance
There is more to getting cyber insurance than simply signing on to a coverage plan. In particular, you must meet an insurance provider’s qualifications. Generally, providers look at two things when considering a client: the strength of their cybersecurity and their adherence to compliance regulations.
The more secure and compliant your business’s IT (especially for highly regulated industries such as finance or healthcare), the more likely a cyber insurance provider will accept you as a client. If it appears that your company takes a lax approach to cybersecurity or fails to comply with regulations, then the provider may reject your application.
How to make cyber insurance affordable
If you are worried about the costs of cyber insurance, there are ways to make you more eligible for a reduced rate.
These steps and others make your company appear as less of a risk to insurance providers.
Learn more about cyber insurance and other methods to secure your systems and data by speaking to one of our experts. Contact us today.