Ten Ways Cyber Liability Insurance Protects Your Company
With cyberattacks up 104% percent in the US in 2021, businesses are waking up to the historic levels of cyber threat like never before. To combat this, they’re arming themselves with cyber liability insurance to cover losses in the event of a cyberattack. According to one recent industry analysis, the global cyber insurance market is expected to grow from $7.8 billion in 2020 to $20 billion in 2025. Fortune Business Insights estimates the market will nearly double to $36.85 billion by 2028. Today, more than half of all US businesses now have cyber liability insurance, and adopting this important business protection shows no signs of slowing down.
But is a cyber liability insurance policy the right thing for your business? In nearly every business case, we believe the answer is yes. Let’s talk about how these policies work and what you can expect from cyber liability insurance companies.
Cyber Liability Insurance: What Is It, and What Does It Do?
Cyber liability insurance is a policy that protects your company from the impacts of a data breach. Think, for a moment, about just how wide-ranging the effects can be.
Lose transaction data, and your customers may find their financial details for sale on the dark web. Lose healthcare data, and the impacts could be far worse. When a cyber criminal can steal passwords, you could have bad actors stealing your files, your trade secrets, and more. And nearly any type of breach could result in your systems going dark, sometimes for minutes or days. For many companies, especially those with online shops or service operations, every minute your system is down could result in millions in lost sales and productivity.
Cyber liability policies protect companies against the wide range of impacts of a cyber attack. They’ll help companies hire the extra human resources they need to mitigate the damage in their system and protect against collateral damage customers, and suppliers may experience. Perhaps most important, they’ll help you repair your reputation and respond quickly to shut down the attack.
With the average cost of ransomware attacks rising, these policies can save companies big. According to a recent report by Gallagher, the average price of a ransomware demand in the US is more than $220,000, with average downtime running at 23 days. In 77 percent of those attacks, the attackers threaten not just to shut down systems but make the victim’s data public. The time has never been better to investigate cyber liability insurance.
Who Should Buy Cyber Liability Insurance?
Most larger companies have woken up to the benefits of cyber liability insurance policies. But many smaller companies remain on the fence, wondering if all this protection is something their company needs. It’s an important question. After all, the cost of cyber liability insurance is significant. A national survey of policies reported by AdvisorSmith showed prices for the policies rising by 7 percent in 2021, to $1589 a year, per million dollars of coverage. Additionally, those insurers require their policyholders to have a whole battery of cybersecurity tools and policies in place before they will qualify for coverage.
Still, even with all these expenses, the majority of companies make good candidates for this kind of policy. Why? Because most companies handle sensitive data, such as:
- Transaction data, including credit card numbers and bank account information
- Health data including conditions, medications, and more
- Personal information for their employees—including direct deposit information, addresses, emails and passwords
- Files containing trademarked or patent-protected materials
- Advance information regarding product development or sales
- Safe information handling per regulations such as HIPAA, or government bodies such as the Department of Defense
So, if the prospect of your information leaking puts you into a cold sweat, it’s a pretty good indication your company should invest in cyber liability insurance.
The Ten Ways Cyber Liability Insurance Companies Protect You
There are so many benefits of cyberv liability insurance, because there are so many ways a cyber attack can impact your business. Here’s the most common things covered under cyber insurance policies.
#1— Covers Your Financial Losses in the Event of a Breach.
If you’ve had a business stoppage as a result of a data breach, and you can provide proof of this stoppage, you can turn that in for compensation under your plan.
#2—Helps You Rebuild Your Systems after an Attack
A cybe rattack is often about so much more than just stolen data. Hackers often create a lot of damage on their way in and out of your system. They can destroy whole areas of your code, delete important files, and corrupt databases, as a start. You’ll need extra IT firepower to comb through all parts of your systems, and determine what’s missing, and where the damage has occurred. You’ll also need new tools and policies to deter hackers in the future. A good cyber liability insurance policy will pay for this critical, time-sensitive work.
#3—Protects You Against Cyber Extortion and Ransomware
Cyber thieves almost always ask for a “ransom”—a payment made for them to give you back your data and exit your system. In general, we usually recommend you don’t pay those ransoms. Companies with robust backup systems are generally safe from this threat. About half of hacking victims are forced to pay up, however. In this no-option scenario, most cyber liability insurance companies will reimburse the cost of your ransom payment.
#4—Pays for Crisis Communications and Customer Campaigns During an Attack
Communicating with your affected customers during a breach is a delicate business. It usually requires the help of a crisis communication firm to help, in conjunction with your company’s law firm. The goal here is to mitigate damage to your reputation, and involve your customers in the cleanup process as quickly and efficiently as possible. Sometimes this will require customers to reset their profiles or passwords, and also be vigilant for signs that hackers are using their information to make purchases or create fraudulent profiles online. Affected clients will have to have a good crisis comms effort. Your policy will help pay for hiring any consultants needed for this work.
#5—Funds Identity Theft Protections for Customers Who’ve Been Affected by a Breach
When a customer has their information stolen due to a cyber attack at your company, they need identity protection. It is standard for the company that caused the breach to pay for at least one year of coverage by major fraud detection companies. In the event of unusual activity, customers are notified. Your cyber liability insurance provider will pay for this, if you carry cyber risk insurance.
#6—Covers the Costs of Forensic Analysis so You Can Determine the Origins and Extent of the Problem
Even if you have cybersecurity tools in place that detect anomalous activity in your systems, (SIEM, EDR) analysis of the situation is needed. When an attack strikes, you’ll need extra IT help to quickly analyze the data, and determine the source of the problem. This service will find the problem at its source, and provide you with the documentation you need to make a claim to your cyber risk policy company. Afterwards, the insurer will reimburse you for the work that was done.
#7—Pays for a Proper Legal Defense Should You Get Sued
If your company is involved in a major data breach, you’ll want legal defense counsel to help manage claims from customers, and provide crisis communications counsel. A cyber insurance company will provide reimbursement for this.
#8—Funds a Remediation Effort and Investigation if a Lost Device Causes a Breach
When an employee loses a laptop/tablet/phone, the consequences can be particularly severe. If a thief can crack into your company systems, the results could be severe.
#9—Protects Your Company in the Event A Hacker Commits Slander Using Your Accounts
Once a hacker has control of your network, it’s plausible that they could use your website, email system, or customer communications to spread hate speech or slander specific parties. Any message traveling on your system makes your company liable, regardless of who generated it. A good lawyer and crisis communications firm can help you mitigate the damage. Cyber liability insurance companies will pay for any fees involved in that process.
#10—Forces Your Company to Up Its Cybersecurity Game to Qualify for Coverage
Not everyone would consider having to buy new cybersecurity tools as an advantage. But it truly is. Cyber liability insurance companies have strict guidelines their policyholders have to follow. They enforce a high standard of readiness to ensure that you’ve done everything possible to prevent a breach. This may require you to layer on additional cybersecurity defenses you would not have considered. But trust us, it’s a good thing. When it comes to the health of your systems, the best strategy is prevention. Always.
Are you Ready to Explore the World of Cyber Liability Insurance?
Integris has all the information you need to take a deeper dive if you’d like to learn more. Check out our recent webinar on how to get—and keep—cyber liability insurance. And check out our recent blog on the controls that affect your ability to be insured. While Integris does not sell insurance directly, we work closely with your insurer to ensure their requirements are met. Isn’t it time you protected your company with cyber liability insurance? For more information, contact us. We’ll be happy to offer you a free consultation.
