If you are wondering is cyber insurance worth it, you need to understand that technology involves various risks. Although technology provides you with plenty of opportunities, criminals can also misuse it. You must know what to look for in cyber insurance coverage to keep your business safe.
What is Cyber Insurance?
Cyber insurance cannot protect your organization from various forms of cybercrime. However, if such an event occurs, it helps your company mitigate risk exposure by providing costs that are involved with recovery from the event. The cyber insurance policy is also known as cyber liability insurance coverage.
According to the latest study, one-third of companies in the U.S purchase cybersecurity insurance. There are many cyber insurance companies that offer insurance policies such as Travelers, Allianz, and Chubb. The insurance coverage varies largely by policy and insurer.
Reasons Why Your Business Needs a Cyber Insurance
Do companies need cyber insurance? If you have been thinking about this question for quite some time, take a look at the 7 reasons why cyber insurance is important for a business.
Cybercrimes Are Common
The most important reason why your business needs a cyber risk insurance is that cybercrimes are extremely common these days. In this internet era, cyber attack is a real threat to an organization. It can be as harmful to a business as a terror attack or a natural disaster.
Data Breaches Can Make Your Business Collapse
Data security experts say that you cannot take guarantee of data breaches and network security. Data breaches can happen anytime to any business. It does not matter whether you have a large business or a small business.
If you don’t have a cyber liability insurance, you will face a tremendous financial crisis. The bills that you will have to pay for damages due to a data breach can make your business collapse.
According to the National Cyber Security Alliance, one out of five businesses is likely to experience a data breach. In 60% of cases, the company closes its door as it is unable to recover from the huge financial loss.
Even after a data breach, your business will be running again if you have a cyber insurance policy. It helps in getting a business stand up post-breach by covering the costs and loss of profits.
Your Business Insurance Won’t Help You
Most companies think that as they have business insurance, they do not need cyber insurance. The fact is that your business liability insurance policy coverage excludes cyber attacks.
If there is a data loss due to a computer virus or a disgruntled employee, your business insurance policy will not cover you. It will provide coverage if there is data loss or system outages due to any natural disaster. It excludes malicious attacks such as hacking.
Cyber Insurance Provides Effective Risk Management
Large organizations have a risk management department. However, small businesses cannot spend so much money on keeping a risk management department.
A good cybersecurity insurance policy can play this role effectively. The functions of cyber insurance are similar to that of a risk management team.
If you are about to sign a government contract, you will need a cyber risk insurance for it. In order to engage with another businesses, cyber insurance coverage is essential. If you are wondering who needs cyber insurance, the answer is ‘every company’, be it small or large needs it.
Cyber Insurance Protects the Reputation of Your Business
When there is a security breach, the reputation of your business is at risk. Having a cyber risk insurance helps in protecting your reputation.
It is extremely costly to rebuild or maintain your reputation after a cyber attack. When your system gets compromised, there is a lot of risk of losing the hard-earned trust of your customers. This can harm your business to a large extent.
Third-Party Data is of Immense Value
Businesses hold third-party data that belongs to suppliers and customers. Commercial contracts and non-disclosure agreements often contain warranties related to the security of third-party data. If the third-party data is accessed or lost in case of a breach, the damage will be very expensive for the company.
Wrapping It Up
Small businesses tend to believe that they are safe from hackers, data breach, and viruses. The truth is that both large and small businesses are targets for cyber attacks. If you have a business, your cybersecurity should be the most important thing for you.
If you look at today’s technology and the rate of cyber crimes, you will understand that anyone can experience a data breach or cyber attack. Not having a cyber insurance can make you suffer huge financial losses.
One question that bothers most companies is “How much cyber insurance do I need?” It depends mainly on the type of business, limit of liability, and annual revenue. If you have a small business, it can cost you somewhere between $750 and $8000.
Your business is your dream job. Therefore, you should not let a hacker disrupt your work. Invest in a good cyber liability insurance policy and stay safe.