Cyber insurance protects businesses against cyber crimes and events like data breaches, extortion, and phishing. When your business is targeted by cybercriminals, cyber insurance can help cover expenses like data restoration, crisis management, and settlements.
Understanding what cyber insurance covers and what types of cyber insurance claims scenarios are most common can help business owners prepare themselves and their businesses for unexpected cyber attacks.
Here’s a closer look at what cyber insurance is, what it covers, and some of the most common cyber insurance claims scenarios.
What is Cyber Insurance?
Cyber insurance covers businesses against a wide range of cybersecurity threats. Small businesses, in particular, are vulnerable to cyberattacks as they often don’t have the IT infrastructure to monitor and respond to these attacks.
After a data breach or another cyberattack, your business may be faced with significant expenses related to data restoration, reputation management, crisis management, settlements, and more.
Cyber insurance can help cover these expenses, making it easier for your business to recover after a cyber attack,
What Does Cyber Insurance Cover?
Cyber insurance covers various expenses that may result after a data breach, including:
- Crisis management
- Data restoration
- Reputation management
- Lost business income
- Lawsuit settlements
Cyber insurance includes first-party and third-party coverage. First-party coverage includes expenses directly related to the data breach, while third-party coverage includes expenses related to third-party claims.
Cyber Insurance Claims Scenarios
Cyber insurance protects businesses against a wide range of digital threats. By taking a look at common cyber insurance claims scenarios, business owners can better understand how their cyber insurance policies protect their businesses against cyber criminals.
Here are some of the most common cyber insurance claims scenarios.
Ransomware attacks involve installing malware on your computer systems that locks your files and sensitive data. Attackers use ransomware to extort businesses by threatening to delete or leak their data.
Ransomware attacks may cause businesses to incur extensive damages, including costs related to extortion fees, forensics, data recovery, crisis management, and business interruption.
A common cyber insurance claim scenario involves a disgruntled employee stealing and leaking sensitive business and customer data. For example, if an employee finds out they are to be terminated, they may retaliate by publishing customers’ personal details online. As a result, these customers may sue the business, leading to costly settlements and reputation management costs.
Cyber criminals often target employees at businesses with phishing scams. An employee may receive an email from a person posing as an executive at your company who is requesting sensitive employee information, such as W-2s. Believing the email to be legitimate, the employee may hand over this data, compromising the personal information of all of your employees. The scammer may then use this information to file false tax returns on behalf of the employees, causing significant damages in the process. In this instance, the business may be responsible for costs associated with forensics, incident response, and more.
One of the most common cyber insurance claim scenarios involves data breaches. The attacker may be able to install malware on your company’s website server, allowing them to access your clients’ personal information, including names, email addresses, and credit card information. This data then may be sold or used to commit fraud. As a result, your company would be subject to costs related to notifying the affected parties, settlements, forensics, reputation management, and incident response.
Incidents like these can easily result in hundreds of thousands or even millions of dollars in damages. Without cyber insurance, businesses may have to pay these costs out of their own pockets, and small businesses, in particular, often do not have the cash flow to sustain themselves after such an event.
How Much Does Cyber Insurance Cost?
The cost of cyber insurance can vary significantly depending on several factors. Annual costs can range from as little as a few hundred dollars to $5,000 dollars.
These factors may impact the cost of your cyber insurance policy:
- Business location
- Number of employees
- Type and amount of data your business stores
- Annual revenue
- Security measures
- Claims history
- Coverage level
KSA Insurance works with Coalition to provide business owners with comprehensive, affordable cyber insurance policies that protect them against common cybersecurity threats.
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Cyber insurance provides essential coverage to businesses that store and maintain sensitive data. Understanding what cyber insurance covers can help you stay prepared for the unexpected.
At KSA Insurance, we partner with Coalition to help businesses in South Carolina and across the southeastern United States find affordable and comprehensive cyber insurance policies.
Contact us today to get a quote and learn more about cyber liability insurance.