There has been a rise in cyberattacks and high-profile data breaches. In recent years, particularly during the current pandemic crisis, the number of people exposed to viruses and other malware on the internet has increased significantly. Therefore, an authority working group was created with the purpose of investigating whether it is possible to standardize the wording of the cyber liability insurance policy language.

Not only are huge enterprises vulnerable to being hacked or infected with a virus, but so are small and medium-sized businesses. Was it ever brought to your attention that 55% of small firms have had a data breach, with 53% experiencing several breaches? 

Your reputation and the safety of your customers and workers may be jeopardized, as well as your company’s computer system, if there is a data breach. As a result, cyber insurance may be an excellent preventative measure for any size firm.

The meaning of cyber insurance

Before understanding what cyber insurance is, let’s first understand what a cyber attack is and how people get affected by it. The term “cyber attack” refers to a collection of acts carried out by the malicious attackers in an attempt to obtain illegal entry into, steal information from, or cause harm to computers, internet technology, and other electronic systems. In many cases, the goal of these assaults is to steal confidential material, such as consumer credit card numbers or staff private details, which the cybercriminals then exploit to get access to money or commodities by impersonating victims.

Now let’s learn what cyber insurance is; cyber insurance is a type of insurance product designed to assist businesses to protect themselves against the potentially horrific consequences of cybercrimes such as malicious software, ransomware, distributed denial-of-service (DDoS) attacks, and any other approach used to negotiate a network with sensitive information. These solutions, which are often known as cyber risk insurance or cybersecurity insurance, are customized to assist an organization in minimizing particular risks.

In general, cyber insurance protects your business’s responsibility for a cyber attack involving confidential client information such as driver’s licenses, Social Security numbers, account numbers, credit card numbers, and health records.

The significance of cyber insurance in today’s digital world

Electronic data loss, breach, or theft may have a severe effect on a company, resulting in the loss of clients and income, among other consequences. Businesses may be held accountable for damages resulting from the theft of confidential information by third parties. In order to safeguard organizations against the dangers of cyber events, especially those related to terrorism, it is essential to have cyber liability insurance. As a result of cyber-risk coverage, it is possible to respond more quickly to cyber assaults and incidents.

In a breach that occurred in 2011, hacked accounts from the PlayStation Network were exposed, including the personally identifiable information (PII) of 77 million PlayStation users. Users of PlayStation consoles were unable to access the service as a result of the compromise, which caused an outage that lasted 23 days. Sony was forced to pay more than $171 million in expenses as a result of the hack. Sony did not have cyber insurance coverage in place at the time of the incident, which may have covered some of the expenses. According to the outcome of a court lawsuit, Sony’s insurance coverage only covered damage to physical property, leaving Sony responsible for the entire amount of expenses associated with cyber losses.

Who is eligible for cyber insurance?

It is possible to profit from cyber insurance for businesses that store and handle electronic data online (such as client contacts and sales), as well as PII and credit card details (for example). Additional benefits of cyber insurance may be realized by e-commerce enterprises since downtime caused by cyber disasters might result in a loss of revenue and consumers. In a similar manner, any company that maintains client information on its website may benefit from the potential protection provided by cyber insurance plans.

Cyber insurance covers…

A cyber event or hacking by a third party can lead to money being stolen from the insured’s bank account, credit card, debit card, and mobile wallet. This coverage will pay for the money to be returned to the insured’s account. This insurance also provides coverage for the expense of defending a claim brought against the insured by a third party who is the target of identity theft fraud.

  • It pays for the expenses of bringing the stalker to justice. The insurance policy will cover the expense of data restoration caused by malware.
  • Third-party or impacted parties may file a claim for damages against the insured because of the hacking. The insurance covers defense expenses for such claims.
  • The insurance provides coverage for financial damages suffered as a consequence of a bogus email attack, as well as the costs associated with pursuing the perpetrators of the assault.
  • Additionally, it guards against phishing attempts and other malicious websites. It protects against the fraudulent use of a bank account, a credit card, a debit card, or an electronic wallet to make online transactions by a third party.
  • It provides coverage for defense expenses in contempt and invasion of privacy lawsuits brought against the insured as a consequence of the insured’s publishing or broadcasting of any digital media material.
  • As a consequence of the cyber extortion threat, it provides protection against extortion losses and reimburses the costs associated with prosecuting criminals.
  • In light of the ever-changing nature of cyber-attacks and new obstacles, general insurers must continue to develop specially designed solutions based on statistical insurance phraseology. 

Insurers should strive to achieve the aforementioned objectives in a fair and beneficial way for policyholders.

But there are certain things that aren’t covered by cyber insurance…

Prior notification of a fact or condition that has already been acknowledged by the prior insurer is not permitted under this provision. In addition, the understanding of one insured person is not assumed to be held by another, and only the knowledge held by the organization’s coo, cfo, or ceo is assumed to have been held by the organization. An insured’s fraudulent conduct or deliberate violation of any such law or regulation is covered. Mechanical failure may manifest itself in a variety of ways, including gradual degradation, electric disturbance, media failure or collapse, or any other malfunctioning condition.

What is the procedure for obtaining cyber insurance?

Most of the same companies that provide E & O insurance, commercial insurance coverage, and property investment insurance also sell cyber insurance coverage. A common feature of most plans is first-party coverage, which relates to damages that directly affect a firm, and second-party coverage, which applies to damage incurred by others as a result of a cyber event or incident, regardless of whether or not they have a commercial connection with the company.

Cyber insurance plans are designed to assist in the recovery of financial damages incurred as a consequence of cyber events and accidents. Cyber-risk insurance also pays for legal support, detectives, crisis managers, and consumer credits or reimbursements in the event of a breach.

How do you pick a cybersecurity insurance policy and what does it cost?

Most of the time, cyber insurance premiums are based on the insured company’s annual revenue and the type of business it does. To be eligible for coverage, a person or institution must generally agree to an insurance company security review or produce evidence using an authorized assessment instrument, such as the one given by the Federal Financial Institutions Examination Council (FFIEC). The findings of a security audit or the paperwork generated by authorized assessment tools will be taken into consideration when determining the kinds of coverage offered by a cyber insurance company, as well as the value of the subscriptions.

Since cybersecurity insurance is still in its early stages, plans will differ significantly from one supplier to the next. Companies should carefully study the policy’s terms and conditions to verify that it includes all of the appropriate safeguards and measures. In addition, businesses should assess if their policies offer enough protection against existing and new cyber events and threat profiles, among other things.

Should you get cyber insurance in India?

As a result of the constant coverage of data breaches and cyber incursions in the media, business leaders are growing more concerned than ever about hackers and other data security breaches. This worldwide danger is heightened for accounting company CEOs, who are confronted with the twin dilemmas of not only keeping their own information, such as a corporation, but also securing the information of their customers.

Any security infringement on your company’s technology might cost you money and, worse, create emotional agony. For this reason, it’s always a good idea to insure your organization with the finest cyber liability insurance coverage in order to cope with any implications that may come as a result of any technical security challenges.

Also Read: 6 Ways To Incorporate Cyber Security Practices Into Your Website