Is Cybersecurity Insurance Worth It?
Businesses collect an unprecedented level of data in today’s online shopping world. Just by browsing a website, consumer data may be transferred to the website host and held for a variety of purposes.
Whether data is being collected for intentional purposes or to facilitate a retail transaction, businesses have loads of personally identifiable information (PII) that can be stolen. Each day, hackers seek new ways of gaining access to a company and taking advantage of the data stored on the company network.
While information technology (IT) professionals are always trying to find new ways to secure a business, hackers inevitably get in. For some, enlisting in cybersecurity insurance may be an additional way to support the security of your business. But is it worth it?
Cybersecurity insurance may or may not be worth it to protect your business. Here’s what you need to know to first learn about cybersecurity insurance, when it is required, and if you should consider it for your company’s security.
What is Cybersecurity Insurance?
According to HUB International, cybersecurity insurance is a business liability insurance that protects businesses against data breaches and other cyber security risks.
Much like liability insurance used to protect property, like homes and vehicles, businesses can purchase cybersecurity insurance to protect customer and employee data, restore and/or repair compromised data, computers, networks, and much more.
Sometimes cybersecurity insurance is required. The same goes for a cybersecurity policy (and often these go hand-in-hand), but this will solely depend on the providers you are working with and your business offerings. For example, if you work in the financial services industry, then it may be more important for you to get cybersecurity insurance.
Key Features of Cybersecurity Insurance
Every business is at risk for a cybersecurity attack. So with access to the key features available through cybersecurity insurance, you can better protect your company against these attack risks and downfalls.
Some key features of cybersecurity insurance include:
- Cyber coverage for first-party and post-breach expenses
- Fees for a privacy attorney
- IT forensic investigation
- Compliance under select cybersecurity notification laws (which differ by state)
- Credit monitoring to support those compromised individuals
- A PR firm to manage the crisis during a cyber insurance claim
- Support with regulatory fines incurred
- Support for class action lawsuits resulting from a data breach
The level of coverage in your cyber insurance policy will differ between insurance companies, available services in your region and market, your business offerings, and much more.
However, know that by having cyber liability coverage, you will be saving your company the potential for losing thousands if not millions of dollars to fines and legal recourse following a data breach.
When You Should Get Business Cybersecurity Insurance
One of the biggest misunderstandings of cybersecurity insurance is whether or not it is required. Cybersecurity insurance is not required in order to operate a business, but some industries, certifications, and service providers may ask that you get it.
Any business that is actively storing data on their company networks should invest in cybersecurity insurance. It becomes more and more important to get cybersecurity insurance when your data is of higher value and when hacking is prevalent in your industry.
There are several advantages to getting cybersecurity insurance. For example, you may pay a monthly or annual fee for the insurance. However, the cyber insurance cost will be far more affordable than the exorbitant fees that you would have to pay out of pocket for fines, compliance fines, PR firm hiring, and attorney hiring. Additionally, if you have the insurance already, then you would immediately have a team supporting you if a data breach were to occur.
The best time to get cybersecurity insurance is now. Data breaches occur every 40 seconds, which means that at any second, your business could fall victim to a security event.
Should I Get Cybersecurity Insurance For My Business’ Security?
The bottom line is that your business absolutely should get cybersecurity insurance protection. This will drastically improve your business security and offer you and your customers financial peace of mind in the chance that your business falls victim to a cyber attack.
Cybersecurity liability insurance does not work alone. In fact, you should consider it to be only one facet of a robust security plan. Your security plan should also include:
- A security policy
- Data monitoring
- Employee monitoring
- Firewall and antivirus protection
- Antimalware support
- Employee training
- Encryption software
- Password authentication
- Regular security audits
With these security measures in place, and your company protected by a cybersecurity insurance policy, you’ll find that your business will be better protected against a cyber attack.
There is no sure-fire way to stop cyber attacks from happening. With strong cybersecurity and a cybersecurity insurance policy, you can defend against a significant cyber event.
Our Take: Is Cybersecurity Insurance Worth it for Your Company Security?
Our big takeaway is that cybersecurity insurance is worth it so long as the insurance company you choose provides many of the features listed above and the company has good reviews. As with anything you purchase for your business, make sure that it is compatible with your operations and that it will work for you.
Cyber liability insurance should not be used in isolation. It should be used alongside strong security support platforms, like monitoring software, user behavior analytics, and data protection software.
While most businesses think that cyber incidents wouldn’t happen to them, they may be shocked to learn that this is not true. Small businesses, in particular, often think that they do not collect enough data to be targeted by hackers; however, 85% of small businesses owners believe they are safe from hackers, viruses, and data breaches. But, the reality is that data breaches target small to medium-sized businesses most of the time.
Considering that data breaches are extremely expensive and that a large majority of businesses do not recover from a data breach, then it is of the utmost importance that even small to medium-sized businesses put protections like cybersecurity insurance in place.
By SoftActivity Team.