Cybersecurity Insurance 101: A Breakdown of Requirements

Cybersecurity incidents have continued to increase over the years, with more organizations struggling to keep their data safe from cybercriminals. With this surge in attacks, cyber insurance policies have become more critical than ever.

These policies can help businesses mitigate their losses after a cybersecurity breach, making it easier to address the problem and recover. Though attack prevention should always be top of mind, having the right insurance in place is an excellent way to stay safe regardless of what may happen.

That being said, recent studies of small and medium businesses show that most companies don’t have any type of cybersecurity insurance. If you’re in the same boat, look at our breakdown of cybersecurity insurance below and why finding the right policy should be at the top of your business to-do list.

What does cybersecurity insurance do?

Cybersecurity insurance generally covers two types of cyber risks:

1. First-party coverage
2. Third-party coverage

First-party coverage handles a company’s own damages following a cyber incident. Third-party coverage covers any legal expenses due to said business being blamed for another organization’s losses from a cyber incident. 

For example, first-party coverage would cover the money used to notify your customers about the data breach, as well as any public relations efforts used for damage control. Third-party coverage would help you pay for lawyers’ fees and settlements should you and the affected organization reach a settlement outside of court.

Different policies cover different amounts, which is why it’s vital to review your policy from top to bottom before signing on any dotted lines.

What risks will cybersecurity insurance protect me from?

The most popular cybersecurity insurance will protect your business from cyberattacks by addressing five types of coverage:

1. Network security
2. Privacy liability
3. Network business interruption
4. Media liability 
5. Errors and omissions

Network Security

Most companies should aim to have some form of network security coverage in their cybersecurity insurance policy, as it protects businesses in case their network security fails. This includes data breaches, malware infections, viruses, email compromises, and ransomware. This type of coverage will help you move forward should your network security fall short.

Privacy Liability

If your company has a vast amount of private information, you’ll want to look into this type of cybersecurity insurance. Of course, the last thing you want is your customer’s information to be stolen, but should this happen, privacy liability coverage will protect you from any liabilities that may come from said cyber incident.

For example, this insurance will help fund a potential settlement if a consumer class action lawsuit is thrown your way after a data breach. Use this insurance to protect your company’s overall privacy.

Network Business Interruption

These days, most businesses depend on technology to get their jobs done. If this rings true for your organization, you’ll want to add network business interruption coverage to your cybersecurity insurance policy. This way, should your network ever go down, your coverage will help cover expenses incurred and lost profits that you experienced during this time. 

If your system ever fails and your company is negatively impacted, this is the kind of coverage you’ll need. Sometimes, hackers can altogether disable networks, leaving a trail of lost time and money behind you. But with network business interruption coverage, you’ll rest a little easier knowing you’re protected should you have any operational issues.

Media Liability

Does your business use any type of advertising – both online or print? If so, you’ll need to learn more about media liability coverage. This insurance policy protects you from any intellectual property infringement, other than patent infringement, that results from advertisements you have in place.

This coverage is for you if you’re on social media or take out ads in any sort of publication. Include this coverage in your policy so you can protect your organization’s intellectual property.

Errors and Omissions 

If a cyberattack or incident ever prevented you from following through on your services and fulfilling the requirements of your contracts, errors and omissions coverage would keep you safe. Should a client or company submit a claim about your performance, if a cyberattack were behind it all, you’d be covered.

This type of coverage can also include legal defense costs from a lawsuit or dispute with one of your customers. It’s great to prioritize should you not be able to perform your work accordingly due to a cyberattack. 

What’s not covered by cybersecurity insurance?

Typically, there are a handful of things that cybersecurity insurance policies don’t cover:

1. A future loss of profits due to a cyberattack
2. Loss of value due to the theft of your intellectual property
3. The costs of improving your technology systems, such as updated cybersecurity measures and software

Despite these occurrences, cybersecurity insurance is still a powerful tool you can use to protect your organization should it undergo an attack.

How do you find the right cybersecurity insurance?

If you’re looking for a cybersecurity insurance policy, know that there’s no one-size-fits-all option. Instead, each policy should be custom to your business and its unique needs. We’re here to help you learn more about which policies you need and which ones aren’t worth paying for.

On a final note, remember that although insurance is another way to protect yourself, it shouldn’t be your only investment. Take the time to address all aspects of cybersecurity, such as what you can do both before and during an attack as well. Learn more about some of the most significant risks you’ll face and how you can adequately prepare your team for the worst.

And if you still have questions, that’s what we’re here for. Send us a message, and we’ll help you find a cybersecurity insurance policy that works for your organization!