Most companies are using technology for conducting their business. Technology is helping companies in delivering better services to their customers. But, cyberattacks are also increasing with time. Even companies like Reddit and Equifax have fallen victim to cyberattacks. These attacks can cause huge damage to your organizations. Most of the small-sized companies never recover from a data breach. Thus, it is important to protect your company from attackers. Cyber insurance will help you in reducing the cyberattack risk.
Cyber insurance policy will help you in recovering your data after a data breach. Data breaches can be very expensive. Equifax lost more than $1 billion in legal fees. Thus, it is important to buy a cyber insurance policy. More than $7.5 billion worth of premiums is already purchased by 2020. According to a report by PwC, more than one-third of USA companies already have a cyber insurance policy.
Data privacy regulations like HIPPA are made to protect the customer’s data from getting compromised. Companies that deal with sensitive data have to ensure that their data is secured. If you are working in the financial or healthcare industry, then you need to comply with many different regulations. If you are not following HIPPA rules, then you can face a fine of more than $1.5 million.
Technologies like IoT and cloud providers have also increased the risk of a data breach. Your employees can use their mobile devices for accessing your corporate network. This can create many loopholes in your network. Security breaches are increasing with time. Most attackers are attacking the health-care and financial industry. According to a study by Ponemon Institute, more than 23 million records were leaked in 2011. This is only going to increase with time. Thus, cyber insurance policy is becoming more important with time.
Advantages of Cyber insurance policy
Closing the gap between current needs and traditional policies
Most traditional policies are useless for modern companies. They only cover liability that arises from tangible property. For example, it will only cover your server. These policies don’t cover the data that you have stored.
Most traditional policies also don’t cover the breach notification costs. This can create a gap in coverage of your business digital assets. Thus, you need to pay the full costs of the data breach. Cyber insurance policy will help you in covering this gap. Cyber insurance policy mostly provides coverage for:
- Liability for data loss and data breach
- Legal penalties and fines
- Regulatory fines
- Costs to respond to a data breach
It will offset the expense of a security breach
Data breaches are unpredictable in nature. Thus, it is very difficult to determine the budget of your policy. The complexity and size of your data breach can vary according to your situation. If you are storing patient records, then data breaches can be very costly for your company. You need to deal with PHI and HIPPA regulatory agencies.
Cyber insurance policy will help you in coping with the unexpected expenses. It will help you in dealing with the costs of data breach notification. Also, you don’t need to worry about legal fees. Your policy will also help you in dealing with legal settlements and regulatory fines.
Provide Resources for the quick response
Your carriers will also offer resources to your company. This will help you in dealing with a data breach. Most carriers will provide a breach coach to your company. They will also provide an attorney to your company. Your attorney will help you in decreasing the legal exposure.
Your insurer can also provide you a referral for other services. They will help you in finding service providers for forensics, PR and legal team. If you are using the approved vendors, then they will also increase your coverage limits. This will also help you in saving your time. You don’t need to worry about finding service providers for your company.
Limitations of Cyber Insurance Policy
Coverage Limits
Cyber insurance policies can differ. For example, some data breaches are not caused by first-owner. Sometimes data breaches can be caused by third-party service providers. If you are in the health-care industry, then you are mostly responsible for protecting your data. Thus, your cyber insurance policy won’t cover the data breaches caused by third-party vendors.
Limited Choice
Your cyber insurance terms will restrict your response to a security or data breach. It can also limit the choice of third-party vendors. Most companies will prefer to work with vendors with whom they already have a relationship. However, your policy will force you to work with approved vendors. These limitations can affect the quality of your response. For example, if you are using a foreign call center to deal with a data breach, then your response quality will automatically go down.
It can’t remove the importance of Data Protection
Cyber insurance policy can’t replace the importance of data protection. Your company is still responsible for protecting your data. You have to improve our security measures for protecting your data. Data protection is more important when compared to cyber insurance. You should regularly assess the security and privacy risks. This will help you in finding security gaps in your network.
Your IT department should also focus on the Incident Response Plan. This plan will help you in dealing with a security breach. Thus, your response plan must be cost-efficient and effective. It will help you in developing guidelines for dealing with data breach incidents.
Conclusion
Data breaches are becoming more complex and common with time. Thus, it is important to buy a cyber insurance policy for your company. Cyber insurance is different from traditional insurance. It will help you in dealing with the costs of the data breaches. However, these policies should be your last resort. First, you should focus on protecting your data. Make sure that your network is protected from attackers. Also, your IT team should work on an incident response plan. This plan will help you in effectively dealing with the data breach. If you need more information regarding cyber insurance policy, then you can contact Bleuwire.
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