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Understanding the Different Types of Cyber Insurance
Written by: BIS Benefits
What is Cyber Insurance Coverage?
In the modern era, not only are cyber-attacks becoming more common, they're also getting more expensive. According to the experts at IBM, the average cost associated with a single data breach for companies hit a massive $4.45 million in 2023. Note that there is truly no industry too niche or organization too small to become a target.
That, in essence, is why cyber insurance coverage is so important. Sometimes referred to as cyber liability insurance, this is a type of policy that is designed to cover any losses that an organization might go through as the direct result of a data breach, cyber-attack, or similar incident.
First Party
First-party cyber insurance coverage refers to a situation where an insurer would pay a business for any expenses that happen as the direct result of a security breach.
For the sake of example, consider a situation where an attacker infiltrates your business' network, steals client information, and posts it on the Internet. First-party cyber insurance coverage would help compensate you for expenses that happened as a direct result of the breach; including not only the forensic work needed to determine how the breach happened, expenses related to recovering any information, and more.
There are a few different elements of this to be aware of, including but not limited to the following:
- Fraud and Theft
- Business Interruptions
- Cover for Extortion and Blackmail
- Forensic Work
- Loss of Data and Restorative Work
Third-Party
When it comes to third-party cyber insurance, the policy would cover any damages or settlements that a business must pay as the result of litigation or claims for injuries that were due to that business' failure to take action.
To continue with the same example outlined above, third-party coverage would help cover expenses related to
the lawsuits that will very likely be filed after customers learn that their sensitive data has been compromised. Most businesses are also required to notify their customers by law that a breach has happened. Insurance can cover expenses related to that, as well as similar needs like crisis management and emergency risk mitigation, among others.
The elements of this type of coverage include, but are not necessarily limited to, the followin
- Crisis Measures and Emergencies
- Communications and Notifications
- Credit Monitoring and Review
- Litigation Coverage
- Regulatory Coverage
- Credit Monitoring and Review
- Liability for Breach of Privacy and Confidence
- Liability for Media Issues
Different Types of Cybersecurity Insurance Coverage
As stated, one of the major types of cybersecurity insurance coverage is privacy liability coverage. This is a necessity whenever a company is handling sensitive or otherwise confidential information, either on behalf of customers or their own employees.
Another common type of cybersecurity insurance coverage is network security coverage. This is designed to protect a business during any type of network security failure. A data breach is perhaps the biggest example of this, but it can also extend to malware infections, any type of event that compromises business email services, extortion demands, and more.
One of the most important types of cybersecurity insurance coverage is called network business interruption coverage. This helps to protect against those situations where an entire system may fail, either because of an attack or human error. These types of events are almost always disruptive on some level, and every minute that a business cannot be productive is a minute they're losing money.
These are just a few of the major types of cyber insurance that are available. Working with a partner like the team at BIS Benefits can help make sure you're always protected against your unique risk surface so that you can worry less about cybersecurity and can instead focus more on running the most successful business that you can.
What is Not Covered By Cyber Liability Insurance?
While it is true that most cyber insurance policies are very comprehensive by design, there are certain types of events and damages that they specifically do not cover. From that perspective, this is not unlike any other type of insurance coverage you might purchase.
A few of the issues that fall into that category include ones like:
- Damages resulting from a data breach where it is found that your business did not have effective security measures in place at all.
- Damages that were the result of a data breach or other cyber incident that happened before the policy was put in place.
- Situations that happen as the result of human error.
- Data theft, loss, or other damages that happen due to what is ultimately deemed to be an “insider attack.”
- Any costs that are related to making improvements to your technology or other systems. Patching network vulnerabilities or increasing your security posture is something that you will have to do on your own.
Overall, one of the most important things to understand about cyber insurance is that a business must demonstrate that it has taken reasonable steps to protect itself before a provider will pay out in the wake of a data breach. Remember that insurance providers are nothing if not risk-averse. The riskier you're deemed, the more you'll have to pay — if you're offered coverage at all.
If you take no steps to protect yourself despite the fact that cyber-attacks are incredibly common in virtually all industries, you're not going to be able to find the policy you need.
Likewise, working with a partner like those at BIS Benefits can help make sure you get the right type of coverage for the specific threats you face. We'll work hard to understand your business and your industry, allowing us to best find the coverage that will keep you protected.
If you'd like to find out more information about the different types of cyber insurance, or if you'd just like to discuss things with a team of professionals in a bit more detail,
contact BIS Benefits today.
