On December 14, 2020 the US government began investigating yet another cyber attack on the Treasury Department. High-profile attacks such as this are becoming commonplace. Attacks on small and medium sized firms are practically a daily occurrence. The University of Maryland reports that there is 1 data breach every 39 seconds. Our best defense is vigilance and good online security. However, security is not infallible. That’s why we need cyber insurance.
Understanding Online Insurance
Cyber breaches are major concerns for businesses of all sizes in the US. According to one American cybersecurity company the US is currently the target of 18.2% of the world’s ransomware attacks. The ever-present threat of cyber crimes and vulnerability of businesses was illustrated by the twin attacks (Win32/Petya) of 2017. The ransomware attacks disrupted businesses in the US and worldwide, and caused damages that were estimated to exceed $10 billion. Cyber insurance aka cyber liability insurance is a form of financial safeguard to help organizations manage the aftermaths of cyber attacks. The outcomes of attacks include data losses, business email compromise (BEC), and more. Businesses which have cyber insurance can get monetary and other support during and after a hacking attack.
The Need for Cyber Insurance
All businesses that own online assets, provide online services, or store/share data over the internet need cyber insurance. According to US telecommunication giant Verizon, cybercriminals steal intellectual property and valuable data of all kinds. 75% of the time the objective is financial gain. The intent of the other 25% is espionage. Businesses with any online presence are potential targets. An April news article in the Insurance Journal stated that any business is vulnerable to attack, regardless of its location, type, or size. Every organization that uses mobile phones or computers, or accepts bank cards should have cyber insurance.
What Does Cyber Insurance Offer?
Mark Bagley, a top representative at cybersecurity firm AttackIQ, highlights the key merits of cyber insurance. Bagley explains that online insurance covers firms’ costs of restoring system integrity and hiring forensic data services. Insurance covers the loss of all forms of data, cost of legal issues that follow the attacks, and reparation to customers. There are some aspects that cyber insurance does not cover. These include the loss of a firm’s reputation or intellectual property. For example, insurance cannot do much if customers lose confidence in a firm due to a perception of vulnerability to data breaches.
How Much Does It Cost?
Online insurance advisory resource AdvisorSmith carried out a study using estimates from 50 insurance providers. It reported that for moderate risk firms cyber insurance premium can range from $544-2,632 annually. This depends on the business’s revenue and liability limits. As with other forms of insurance, the premium for cyber coverage depends on how much cover one wants to buy.
The size of a business, its annual turnover, business category, type and sensitivity of data, history of susceptibility to cyber attacks, network security infrastructure, and claim history are critical factors. These factors also determine if a firm is eligible to be cyber insured at all. Some aspects require special attention. For example, the deductible can be low or high depending on how much impact a business expects a disruption to cause. The standard deductible is $10,000 for $1,000,000 worth of insurance cover. A lower deductible generally means a higher premium.
How to Buy
The cost of a company’s cyber insurance is relative. AdvisorSmith says that businesses should only ask for quotes from trusted insurance companies via their official websites or offices. Service providers and insurance brokers such as Embroker, CoverageSmith, and CyberPolicy can be good starting points in your search for the optimum cyber insurance policy.
How Much to Buy
This is usually determined by a business’ liability level. How much finance it is able and willing to invest in security is also a factor. US firms can get cyber insurance from $102.75 monthly ($1,233 per year) to $125 monthly ($1,500 per year) depending on state.
Small, home-based business and established big enterprises are equally vulnerable to cyber risk. Many of us use our devices for banking. Migrant entrepreneurs often send money online to pay suppliers and employees overseas. Our devices contain our personal and financial info.
Cybersecurity is vital. The National Cyber Security Centre, NCSC notes that cyber insurance might not prevent an attack or solve all resulting issues. However it can enable businesses to sustain in the aftermath of a breach. According to a report from global cybersecurity firm Kaspersky the average cost of recovering from an attack is $86,000. By comparison the cost of buying cyber insurance is negligible.
About The Author:
Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive, and watch documentaries.