In recent years, cyber-crime has become an ever-present threat to the success of businesses of all sizes. Not just a risk for large corporations but affecting small companies as well. And sadly, current world events have put even more of a focus on the risk of cyber-crime for businesses.
Whilst your business can take many practical steps to protect against cyber-crime, another area you will want to consider is cyber insurance and putting adequate cover in place for the risks your business faces. Cyber insurance can help protect your business against losses resulting from a cyberattack. If you’re thinking about cyber insurance, discuss with your insurance agent what policy would best fit your company’s needs, including whether you should go with first-party coverage, third-party coverage, or both. Here are some general tips to consider.
There are a couple of ways in which you can buy business cyber insurance. You can buy cyber insurance for your business as a standalone insurance policy. This can be considered the most comprehensive way to purchase cyber insurance cover. It can also be purchased as a bolt-on to your business insurance package. For example, it may be possible to add some elements of cyber insurance cover to your other business insurance.
Make sure your policy includes coverage for:
- Data breaches (like incidents involving theft of personal information)
- Cyberattacks on your data held by vendors and other third parties
- Cyberattacks (like breaches of your network)
- Cyberattacks that occur anywhere in the world (not only in the UK)
Also, consider whether your cyber insurance provider will:
- Defend you in a lawsuit or regulatory investigation (look for “duty to defend” wording)
- Provide coverage more than any other applicable insurance you have
- Offer a breach hotline that’s available every day of the year.
First-party cyber coverage protects your data, including employee and customer information. This coverage typically includes your business’s costs related to:
- Legal counsel to determine your notification and regulatory obligations
- Recovery and replacement of lost or stolen data
- Customer notification and call center services
- Lost income due to business interruption
- Crisis management and public relations
- Cyber extortion and fraud
- Forensic services to investigate the breach
- Fees, fines, and penalties related to the cyber incident
Third-party cyber coverage protects you from liability if a third party brings claims against you. This coverage typically includes:
- Payments to consumers affected by the breach
- Claims and settlement expenses relating to disputes or lawsuits
- Losses related to defamation and copyright or trademark infringement
- Costs for litigation and responding to regulatory inquiries
- Other settlements, damages, and judgments
The price of your cyber insurance policy depends on a few key factors, such as your annual turnover, risk level, and the amount of cyber security you have in place. Certain industries, like financial services, are bigger targets for cybercrime because of the amount of sensitive data they carry, so these businesses will need more cover.
To find the insurer best suited to your needs, first, talk to your accountant to work out the level of cover you may need, and consult with us. The important thing is to be clear about your business’s needs before rushing into any policy.
Whether you choose a cyber insurance bolt on to your business insurance package, or a standalone business cyber insurance policy the important thing is that you have clarity about the cover that you are buying and what you are and aren’t covered for. If you are informed, then there will be no surprises if you are in the unfortunate position of needing to make a cyber insurance claim.
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