What Is Cybersecurity Insurance and Does My Business Need It?

Small and large businesses alike are vulnerable to financial losses caused by cyberattacks, such as data breaches, system hacking, and ransomware extortion payments. To mitigate these risks, businesses can purchase cybersecurity insurance, which provides coverage against these incidents. If your business stores sensitive information online or on a computer, it's highly recommended that you carry at least some level of cyber insurance coverage.

How to Get Cybersecurity Insurance

Cybersecurity insurance is available either as an add-on to a business owner's policy or as a separate coverage. Generally, cybersecurity insurance comes in two types: first-party or liability coverage. First-party coverage covers the costs associated with investigating the incident, assessing future cyber risks, lost revenue due to business interruption, and payments for ransomware attacks based on coverage limits. First-party cybersecurity insurance also includes notifying customers about the cyber incident and providing them with anti-fraud services such as credit monitoring. The most common first-party cybersecurity coverage is data breach insurance.

On the other hand, cyber liability coverage protects businesses if a third party sues them for damages as a result of a cybersecurity incident. Cyber liability coverage pays for attorney and court fees associated with legal proceedings, settlements and court judgments, and regulatory fines for noncompliance. It's worth noting that general liability insurance typically doesn't cover data-breach-related liability claims. Therefore, businesses that store customer data should consider a separate cyber liability insurance policy.

What Other Cybersecurity Insurance Do I Need?

Technology errors and omissions (E&O) coverage is also available for businesses that manufacture a technology product or provide technology services. This coverage kicks in if a cybersecurity incident occurs in a customer's business because of an error on the part of the technology company. Technology E&O covers items similar to cybersecurity liability insurance, such as legal fees, court costs, and judgments or settlements but only in covered circumstances relating to products or services.

What Businesses Need Cybersecurity Insurance?

Any business that stores important data online or on computers, has a large customer base, or has high revenue or valuable digital assets is at risk for cybercrime and should consider cybersecurity insurance. However, cybersecurity insurance generally doesn't pay for property damage, intellectual property losses and lost income associated with it, crimes or self-inflicted cyber incidents, and costs for proactive preventive measures. These are typically covered by other insurance policies.

Where Can a Business Purchase Cybersecurity Insurance?

Businesses can purchase cybersecurity insurance through most business insurance providers. Business owners can get multiple quotes in a few minutes from online business insurance companies or work with a business insurance agent to compare quotes and find the best coverage at the best price. Speaking to a business insurance agent can also help assess risk levels and potential premiums to determine if cybersecurity insurance is the right investment for the business.

Contact Whitlock for Cybersecurity Issues

Our cybersecurity experts at Whitlock can answer your questions regarding issues related to cybersecurity. Contact us or call today to see how we can help.