Today, the internet has become an important part of our lives especially after the pandemic. Almost everything we do requires the internet. Everything from instant Messaging, banking, and emailing. shopping and travelling-needs internet. With the growing need for the internet, protecting our information and data have also become a necessity.
Either, you have a company, or business or if you are a habitual user of the internet, you should be aware of how to minimize threats, risks, and cybercrime as well as be cautious, proactive and stay informed of cybercriminals.
What is cyber insurance?
Cyber insurance is a form of insurance for businesses and individuals against internet-based risks. The most common risk that is insured against is data breaches. Cyber insurance typically includes indemnification from lawsuits related to data breaches, such as errors and omissions. It also covers losses from network security breaches, theft of intellectual property, and loss of privacy.
Typically, the most important aspect of cyber insurance will be network security coverage. This coverage will respond in the event of a network security failure – such as data breaches, malware, ransomware attacks, and business account, and email compromises. However, the policy will also respond to liability claims and expenses of an attack or breach.
What does cyber insurance cover?
Cyber insurance policies cover a wide range of possible consequences that could affect your business after a cybersecurity incident.
The main thing to know about cyber insurance policies is that coverage options are usually split into first-party and third-party coverage. Basically, first-party coverage pays for the concrete results of the event itself. These might be things like damaged software, lost emails, and interruptions to business. Third-party coverage extends to the ripple effects of a cyberattack. It provides coverage in the following scenarios.
1. DATA Breach and Privacy Management
2. Multimedia and media Liability cover
3. Extortion liability cover
4. Network Security Liability
• Not covered in cyber insurance
Like most coverages, there are certain exclusions that a cyber policy usually will not cover.
1. Property Damage and Bodily Injury: Physical property damage occurs at any place, or an employee/customer is hurt. The cause of the loss is an exclusion for Cyber insurance.
2. Reckless conduct: Suppose someone in your organization purposefully leaks information or breaks the law.
3. Prior knowledge, pre-existing claims, and retroactive coverage: If you had knowledge of a hack before being insured. Or, you have previously filed a cyber insurance claim that was not covered by your existing insurance provider. Those issues will not be covered by a new policy.
4. Fraud or funds transfer losses: Some cyberattacks involve unauthorized transfers of funds from the business being attacked. Some policies will cover this but not all. Please read the documents carefully or ask your agent about your policy.
5. Infrastructure failure: If the risk is caused due to infrastructure failure such as power going down, a hard drive crashes, electrical or mechanical failures. This may not be covered under a cyber insurance policy.
6. Intellectual property: This is a type of coverage that is occasionally included in cyber insurance policies
7. Failure to repair or correct known vulnerabilities: Suppose you identify a system failure, process, or other defects that lead to a cyberattack. Your cyber insurance provider is likely to deny the claim.
Types of Cyber Insurance
The three main types of Cyber Liability Insurance Coverage are
Cyber Security Insurance is also known as Privacy Notification Insurance. This coverage includes coverage for first-party damage to you and your business. This coverage does not liable from the damage done to third parties. Cyber Security Insurance deals specifically with the immediate response costs associated with a data breach. In many cases, it is required by law to find out how the breach occurred, notify those affected and provide credit monitoring services. Examples of costs included in Cyber Security Coverage include:
- hiring a forensics expert to determine the cause of the breach
- hiring a public relations agency to assist in dealing with the crisis
- setting up a post-breach call center
- notifying affected individuals whose personal information has been affected.
- monitoring these individuals’ credit.
- paying the costs to “restore” stolen identities.
Cyber Liability Insurance, also termed Information Security and Privacy Insurance, covers the insured’s liability for damages resulting from a data breach. This type of insurance protects businesses which sell products and services directly from the internet. It also protects businesses which collect data within its internal network. The most common forms of data breach involve personal or financial information like credit card numbers, bank account information, social security numbers etc. The types of situations where this information is accessed include:
- An employee’s vehicle is broken into, and a business equipment like Laptop is stolen.
- An email containing sensitive information is sent to the wrong person.
- Important paperwork
- Failure to timely disclose a data breach.
– Technology Errors and Omissions
Technology Errors and Omissions Insurance, also referred to as Professional Liability, is a form of liability coverage that protects businesses who provide technology services. This coverage prevents businesses from bearing the cost of defending against a negligence claim made by client, and damages awarded in a civil lawsuit. This Coverage includes business who sell and service computer products. It covers programmers who may create incorrect code for website that causes business to mail products to the wrong addresses.
Types of coverage in Cyber Insurance
- Business Interruption -: Cyberattacks often target e-commerce websites and technology used in production and communication systems between two Parties. Even short interruption in operations can cost thousands of dollars in lost revenue.
- Forensic Investigation-: This investigation coverage is to determine what information was lost or stolen, the extent of the damage
- Credit Monitoring-: A credit monitoring coverage tracks changes in customer Transactions to notify consumers of potential fraud
- Customer Notification-: In this coverage customers have a right to know if they or their businesses could be at risk due to a breach in your infrastructure. They may need to take action to protect themselves
- Data Loss Recovery -: Data Loss Recovery coverage covers the person if a breach or hack results in loss of business records/Data.
- Legal/Litigation-: Litigation coverage covers if a customer sues you for accidentally losing or exposing confidential information of theirs resulting from Lawful actions.
- Regulatory-: Regulatory coverage covers if your business is required to pay government fines or penalties as a result of any cyber security incident
- Extortion-: Extortion coverage covers you if cybercriminals hacked your systems with ransomware or demand money to stop them from releasing or deleting sensitive information
- Crisis management-: Crisis management Coverage covers you if a breach is severe enough to require that your business hire a public relations team to represent you to the public
- Transmission of damage/malicious content-: This coverage covers you if your systems are infected by an attack and a virus or other malware are spread to your client’s System.
The Best Cyber Insurance Companies for 2022
How Fecund will help in cyber-Insurance.
Fecund provides software development and IT consultancy services to companies in the Insurance domain. Fecund strives to provide innovative solutions that impact the business and act as a catalyst for its partners in bringing products faster to the market. Fecund can help in implementing Cyber Insurance solutions and leveraging your PAS System.
Author Bio: Pawan Arora is a seasoned IT professional with over 8+ years of experience in software development, project management, and business analysis. Currently serving as a Technical Specialist at FECUND, Pawan has a strong track record of delivering complex solutions and driving digital transformation for his clients. He holds a Bachelor’s degree in ECE Engineering and has completed various professional certifications in project management, insurance domain, and software development. He is an AINS 21 & 22 Certified professional too. LinkedIn Profile