CYBER risk INSURANCE
Cyber risk insurance, also known as cyber liability insurance, is a policy that helps businesses and organizations mitigate the financial impact of cyber incidents, like data breaches, hacking, or other cyberattacks. The coverage typically addresses the costs associated with recovery, legal fees, settlement costs, regulatory fines, data loss, and even reputational damage that may result from such incidents.
The following are the main types of cover you would expect to see in a cyber risk insurance policy:
1. First-party Covers:
These covers protects the business directly, covering the costs the company faces after a cyberattack.
- Data breach costs: Costs for notifying affected individuals, credit monitoring services, and public relations efforts.
- Business interruption: If an attack halts the business operations, this would cover lost income.
- Data loss: Covers the cost of restoring or recovering data that was lost or corrupted in the attack.
- Cyber extortion: If the business faces ransomware, this would cover the ransom payment and related expenses.
2. Third-party Covers:
These covers protects the business if it’s held liable for causing harm to others. For example:
- Legal costs: If the business is sued for failing to protect its customers' data, this coverage would cover defense and settlement costs.
- Regulatory fines: If the business violates laws like GDPR, this cover will pay the fines and penalties, and other investigation expenses.
- Privacy breach costs: If a third party suffers a data breach because of the company’s negligence, it would cover the related claims.
Key Considerations for Cyber Insurance:
- Policy Limits: Make sure the coverage limit matches the potential financial damage from a cyber incident.
- Exclusions: Some policies may exclude certain types of cyber incidents (e.g., social engineering or insider threats), so it's crucial to review these carefully.
- Risk Mitigation Requirements: The insurers require businesses to have certain cybersecurity measures (e.g., multi-factor authentication, encryption) in place before providing coverage.