Cyber insurance is constantly changing - from its coverage to its costs. For example, between 2020 and 2022, pricing significantly increased due to the impact of ransomware attacks.
As the risk of cyberattacks and data breaches continues to rise, it’s essential to include cyber insurance as a crucial part of your comprehensive risk management strategy.
However, finding the best cyber insurance deal isn’t just finding the cheapest option. It’s about looking for the right balance between cost and coverage quality.
So, how do you do that?
At Intelligent Technical Solutions (ITS), we’ve been helping hundreds of businesses for over 20 years now in making the best cybersecurity decisions for their company, including on matters of cyber insurance.
We invited Marvin Cigarroa, a cyber insurance expert from DataStream, to share his insight on the topic. He’ll answer questions such as:
- What does cyber insurance cover?
- Tips when buying cyber insurance
After a complete readthrough, you should understand cyber insurance coverage and how to find a good one for your business.
What Does Cyber Insurance Cover?
Cybersecurity insurance is similar to other forms of insurance, such as car insurance. It protects you in the event of an unwanted incident, and in the case of cybersecurity insurance, the incident could be:
- A data breach,
- Server malfunction resulting in downtime,
- Network damage and, in some cases,
- Payment of a ransomware demand.
When purchasing cyber insurance, carefully considering your organization’s specific needs and potential risks is essential.
Like selecting car insurance coverage options based on factors such as your driving history and vehicle type, cyber insurance also involves tailoring the policy to your business’s unique circumstances.
7 Tips When Buying Cyber Insurance
Here are seven essential tips to guide business owners when purchasing cyber insurance:
1. Understand your cyber risk profile.
Before purchasing cyber insurance, it’s vital to understand your company’s unique cyber risk profile. Consider the nature of your business, the type of data you handle, and your online activities.
A thorough risk assessment can help you tailor your insurance coverage to address the specific threats your business is most likely to face.
2. Evaluate coverage options.
Cyber insurance policies can vary significantly in terms of coverage. Data breach liability, business interruption, cyber extortion, and legal expenses are vital areas to consider.
Carefully review policy terms to ensure you’re adequately covered for third-party and first-party losses.
“A third-party coverage provides you with protection for liability, and that essentially means claims brought against you by other third parties related to a privacy breach event,” Cigarroa explains.
On the other hand, first-party expenses are expenses that you, the client, would have to pay out of your pocket if you don’t have cyber coverage.
He continues, “So, it’s not that somebody is suing you or bringing a claim against you, and you must protect your business. It’s just the cost you must pay to address a cyber incident.”
Cigarroa then stressed seeking guidance from an insurance professional to ensure you grasp the nuances of each coverage type.
3. Determine coverage limits.
Choosing appropriate coverage limits is a balancing act. You want enough coverage to handle potential losses but don’t want to overspend on coverage you may not need.
The key here is to analyze the potential financial impact of a cyber incident on your business and select coverage limits that align with your risk tolerance and budget. A cyber insurance agent will help with this.
Related: Security Incident or Data Breach: What’s the Difference?
“Drill down what it is that you’re purchasing because the concern is spending money thinking that you are getting a good cyber policy – and you do it on your own – but realize that the coverage you have isn’t as broad or as comprehensive as you could have had you worked with an agent,” Cigarroa says.
4. Consider industry regulations.
Many industries are subject to specific data protection regulations, such as CMMC 2.0 and HIPAA. When purchasing cyber insurance, ensure that the policy aligns with these regulations and provides coverage for fines, penalties, and legal expenses that may arise from non-compliance.
Related: What Happens If My Company Is Out of Compliance?
5. Assess response services.
A critical component of cyber insurance is the availability of response services during a cyber incident. These services include:
- Legal assistance
- Forensic investigation
- Public relations support
- Credit monitoring
Review the response services offered to ensure they are robust and consistent with your needs.
6. Understand exclusions and waiting periods.
Cyber insurance policies come with exclusions and waiting periods like any insurance policy. Exclusions might limit coverage for specific cyber incidents, while waiting periods specify how long you must wait before coverage kicks in. Pay close attention to these details to avoid surprises when filing a claim.
7. Regularly review and update your insurance.
Your business’s cyber risk landscape is continually evolving, so your insurance needs should evolve, too. Regularly review and update your cyber insurance policy to ensure it remains aligned with your current risk profile and business activities. Failing to update your policy could leave you underinsured or facing coverage gaps.
Do You Need Help with Your Cyber Insurance?
Cyber insurance is a critical tool for businesses to defend against the growing threat of cyberattacks. But remember, investing in cyber insurance is not just about protecting your business financially; it’s about safeguarding your reputation, customer trust, and long-term success.
At ITS, we help our clients bolster their network defenses to prevent potential risks and unnecessary costs. If you need help with your cyber insurance, schedule your FREE cybersecurity assessment with us. If you want to learn more about cyber insurance, check out these references:
- 5 Things to Check to Get Cyber Insurance Approval
- How Much Cyber Insurance Does Your Business Need?
- Things to Prepare for Cyber Insurance and Why They're Important
- Why Cyber Insurance Costs are Rising (& How to Get Your Money’s Worth)