Considering how frequently cyber incidents occur these days, you have to be prepared for all manner of threats at all times. On top of installing enterprise-grade tools and implementing comprehensive security policies, you can keep your business adequately protected by investing in cybersecurity insurance.
What is cybersecurity insurance?
Cybersecurity insurance, or cyber insurance, is a type of insurance policy that protects businesses from the negative financial impacts of a cyber incident. This policy can help cover the financial losses caused by a cyberattack and the cost of litigation, communication, recovery, and remediation following the incident.
Most cyber insurance policies provide first-party coverage, which applies to losses that directly affect the policyholder. Some insurance providers, however, offer third-party coverage as well, which refers to losses suffered by other parties because of a cyber incident. These parties may include vendors, partner businesses, and customers.
Some insurance providers exclude certain types of cyber incidents from their policies. These include data breaches caused by insider threats, criminal activities unrelated to cybersecurity, and previously known but unaddressed cybersecurity risks. Make sure to clarify with the provider what is and isn't covered in their policy before you finalize your investment.
Why do you need cybersecurity insurance?
A single cyberattack can put you out of business. IBM and the Ponemon Institute revealed that the average cost of a data breach in 2021 was more than $4 million and that this figure increases by 10% every year. Investing in cybersecurity insurance means your business doesn't bear the full brunt of this cost. Instead, you'll have enough resources to shoulder the following:
The average cost of a data breach in 2021 was more than $4 million and this figure increases by 10% every year. Investing in cybersecurity insurance means your business doesn't bear the full brunt of this cost.
Cost of ransom
The FBI discourages paying ransomware attackers, but if your business cannot function without access to its data, you might be forced to give in just to get your systems back online. With cybersecurity insurance, you can quickly get the funds you need to pay the ransom and avoid incurring further losses.
Post-data breach response
After a data breach, you are obligated to immediately notify your customers, vendors, and other parties who may be affected by the incident. This will give these parties ample time to secure their accounts, check for possible damage, and take other precautionary measures.
Needless to say, notification alone can be quite costly. But with cybersecurity insurance, you will have the financial resources to quickly respond to a cyber incident and keep others safe.
After the cyber incident, you can use the insurance payout to hire a cybersecurity firm to investigate how the attack was carried out and what systems or data were compromised. This will help you determine what needs to be done to prevent similar attacks in the future.
A cyberattack can result in lawsuits against your company from customers, vendors, and industry regulators. In order to defend your business, you may need the assistance of a lawyer who specializes in cybersecurity-related cases. Such a specialist doesn't come cheap, but with cybersecurity insurance, you will have the resources you need to pay for their services.
Cybersecurity insurance can be a lifesaver for your business in the event of a cyberattack. To maximize your company's defenses, however, you must also strengthen your cybersecurity infrastructure. Our cybersecurity specialists at Fidelis can help by evaluating your current infrastructure for vulnerabilities, resolving these flaws with the proper solutions, and monitoring your IT systems 24/7 for any disruptive issues.
Discover how you can protect your business from data breaches by downloading this free eBook today.