Cyber insurance is an essential coverage for any business that handles sensitive information such as personally identifiable information (PII) and electronic protected health information (ePHI).
According to IBM, the average cost of a data breach was $4.2 million dollars in 2021. As cyberattacks become more sophisticated and frequent, it is crucial to protect your business with the right insurance policy.
Types of Cyber Insurance Policies
There are different types of cyber insurance policies, and it is essential to understand the differences to choose the right one for your business. The three primary types of cyber insurance policies are:
First-party coverage: This type of policy covers damages to your business directly, such as loss of income, breach response costs, and damage to computer systems and data.
Third-party coverage: This policy covers damages to third parties, such as clients or customers whose data was breached.
Combined coverage: As the name suggests, combined coverage is a mix of first and third-party coverage. This policy covers damages to both your business and third parties.
Key Factors to Consider When Choosing a Cyber Insurance Policy
The scope of coverage: When choosing a policy, it's essential to consider the scope of coverage offered. The policy should cover the costs of data recovery, business interruption, legal fees, and any other costs associated with a data breach.
Policy limits and deductibles: It is crucial to understand the policy limits and deductibles before signing up for an insurance policy. The policy limits should be high enough to cover the costs associated with a data breach.
Exclusions: The policy should also clearly state what is not covered. For example, some policies may exclude coverage for cyberterrorism or social engineering attacks.
Coverage for regulatory fines and penalties: Depending on the industry, it may be necessary to have coverage for regulatory fines and penalties. Check to ensure that the policy covers this aspect.
Reputation damage coverage: A data breach can also damage your business's reputation. Some policies may provide coverage for reputation damage.
Cyber insurance is a crucial coverage for any business that handles sensitive information. Understanding the different types of policies available and key factors to consider when choosing a policy will help you make an informed decision. At our organization, we can help you choose the right policy that suits your business needs.