Cyber insurance is also known as cyber liability insurance coverage. It helps businesses and individuals protect themselves from Internet- and IT infrastructure-based risks. Interestingly, these types of threats are not covered by traditional, commercial liability policies. This is the primary reason any business with an online presence cannot afford to go without cyber insurance.
Some famous breaches included the 2011 Sony PlayStation network breach compromised more than 77 million personal accounts. This cost Sony an estimated $170 million. While Sony thought their general liability insurance policy would cover the breach, the courts ruled against them. The cost of the notorious 2013 Target data breach was close to a whopping $300 million. Luckily, a 100 million cyber insurance policy helped the company pay a relatively hefty percentage of these costs.
If you are a business owner here are the main reasons you need a cyber insurance policy:
- No one is safe: No individual or company is immune to cybercrime, whether due to human error, software vulnerabilities or weak security.
- Costs are high if you are successfully attacked: A Ponemon Institute report indicates the global average price of a data breach is $3.62 million. It is even more in the U.S. at approximately $6 million. The U.S. Securities and Exchange Commission estimates half of the small businesses that suffer a cyber attack go out of business within six months.
- Cybercrime is growing exponentially: Businesses that hold personal data are particularly at risk. Human error is a company’s most significant vulnerability and the most difficult to guard against.
- Risk and liability: You can be held legally and financially liable if third-party data is compromised in a breach.
Cyber insurance is a growing market which was initially slow to become a mainstream type of business insurance. This is because it is a slightly more nebulous market than traditional insurance, as there is no hard and fast set of rules to assess a company’s cybersecurity. If you own a business and have questions regarding if you need this type of insurance, call us today to speak to one of our agents.