article image 4-15-22.jpgThe Benefits of Cyber Insurance

April 15, 2022

Cyberattacks seem to be a permanent fixture in the news, and it’s easy to see why. Data breaches, malware, and distributed denial-of-service (DDoS) attacks are all becoming increasingly worrisome threats. While individual users have long been warned about the dangers of viruses, many cybercriminals have now turned their attention to major organizations, data systems, and even government agencies. If you insure small businesses, they should understand why you need cyber insurance. There are many important benefits that cyber insurance can offer, including the following four coverages.

Coverage for Data Breaches

Data breaches emerged at the forefront of public consciousness in 2017, when millions of people had their personal information compromised by an Equifax data breach. This incident proved just how devastating and dangerous a cyber attack can be — and just how skilled attackers are, too. If a massive company like Equifax is vulnerable, how can small businesses defend themselves? Luckily, cyber insurance can offer coverage for data breaches, including the costs of litigation, recovery, and identity theft.

Reimbursement for Business Loss

In addition to compromising sensitive information, cyber attacks often interrupt business and cause lost revenue. An effective cyber insurance policy will insulate a company from these costs and provide reimbursement for any income that was lost due to a cyber attack. This is particularly beneficial given the fact that a cyber attack, on average, will cost a company over $1 million.

Defense Against Cyber Extortion

One of the most pernicious forms of cyber attack is the increasingly common malware infection. This kind of attack has seen a sharp rise in popularity in recent years, and indeed, it’s an effective tool for cyber criminals to disrupt targets’ business and achieve direct financial benefit from their attack. Ransomware works by disabling the target’s computer or device and demanding payment in order to regain access. Some ransomware can even encrypt all the files on the device until payment is received. Cyber insurance offers an effective defense against these types of attacks, though, by allowing businesses to recoup the costs associated with cyber extortion.

Forensic Investigative Support

After a cyber attack, it’s vital that a company launch a thorough investigation and identify the source of the vulnerability. In some cases, it may be the result of compromised credentials, or perhaps a business falls prey to a phishing email. No matter what the cause of the attack is, though, it’s imperative that a business rectify the problem and implement preventive strategies so that it does not happen again. To this end, a cyber insurance policy should reimburse any costs associated with a forensic investigation of the attack. Businesses may also benefit from a policy that provides additional investigative support. ◼