Is Cyber Insurance Worth It?
Caeva O'Callaghan | July 21st, 2021
If you’re considering purchasing cyber insurance, how do you know if it’s right for you? And is it another unnecessary cost, or is it really worth it?
Yes – absolutely it is. If your business operates online in any way, cyber insurance will keep your valuable information (and that of your customers and employees) safe.
Without cyber insurance, you may need to pay exorbitant costs if you are targeted in a cyber attack. Such occurrences are only becoming more common – so you’d do well to protect your business before it happens.
In this article, we’ll cover the following questions:
- What is cyber insurance?
- Is cyber insurance worth the money?
- How does cyber insurance protect me?
Any business which operates digitally – in whole or in part – will benefit from the protection cyber insurance offers. In fact, the real question might not be if you need cyber insurance at all, but how to tailor your individual policy to your needs.
What is cyber insurance?
Cyber insurance will help pay for damages, fines and new security measures if your company is targeted by cyber hackers.
The internet has unlocked opportunities for businesses all over the world – but it’s also led to increased opportunities for criminal activities. Nefarious individuals and organizations can now target any business, of any size, from the other side of the globe.
No longer a far-off techno nightmare, cyber attacks are very common and very harmful. Criminals use increasingly sophisticated techniques to obtain sensitive data such as passwords or credit card data which they then abuse or sell to third parties.
This is why any business, big or small, needs cyber insurance. Consumers expect businesses to handle their information responsibly, and regulators can impose heavy fines for breaches in data security.
You need to consider cyber insurance if your business:
- Relies on computer systems and online software for day-to-day operation
- Holds sensitive data about customers or employees (e.g. names, addresses or financial information)
- Owns a website
- Has a payment card industry (PCI) merchant services agreement in place
If any of the above apply to you, having cyber insurance will help you pay for ensuing costs if things go wrong.
Is cyber insurance worth the money?
Yes. If your business is targeted by hackers and you do not have cyber insurance in place, you would have to pay out of pocket for regulatory fines, data retrieval, upgrading your security, investigating what went wrong, compensation to employees and/or customers, and possibly much more.
Cyber insurance is such a vital part of an overreaching cyber security plan because being saddled with all of these expenses at once could put any company out of business overnight, depending on the severity of the attack.
You may not think your business would be an attractive target if it is small and doesn’t turn a large profit. Unfortunately, an easy target is often the attractive one to cyber criminals. Criminals prefer targeting a smaller institution with less money and fewer security protocols, even if it means a smaller bounty. They simply don’t want to spend the time and effort hacking into large systems with advanced security and a higher risk of getting found out.
Your annual turnover or number of employees doesn’t matter: if you are trading business, you are at risk of a cyber attack. To mitigate this risk, it is advisable that you seek out cyber insurance.
How does cyber insurance protect me?
Cyber insurance can cover costs such as, but not limited to: loss of income, forensic investigation services, security upgrades, legal fees, regulatory fines and compensation.
Cyber crime can severely impact your business revenue. Loss of income as a result of damage to your reputation is a very real threat, as you are legally obliged to notify your customers if you suspect their data may have been stolen, and this may affect their decision to renew your services. They may also leave unfavourable reviews online and via word of mouth.
You may even need to shut down or suspend trading for a certain period of time while you sort out the damage and put new security procedures in place. This can be very expensive.
Third party liability costs are typically compensation costs payable to your customers, suppliers or employees and defence expenses you incur. If you are found to be handling sensitive personal information without necessary security measures, you will be found liable.
If you need more information on cyber insurance, get in touch with one of our cyber experts today and we can answer all your questions.
All Information in this post is accurate as of the date of publishing.