Is Cyber Insurance Worth It?

It seems like every day that we hear about another company that has been hit by a cyber attack, resulting in a breach of data. From large enterprises to start-ups, it has become apparent that no business is safe from hackers. Don’t believe it? A study released this week revealed that 36% of Canadian businesses were hit by an attack over the past 12 months, and that number only reflects the companies that are aware they’ve been breached. So what can businesses do to protect themselves?

Some companies are taking a closer look at cyber insurance in an effort to protect themselves from the negative impacts of a breach in data. Cyber liability insurance coverage (CLIC) has been available for about 10 years now, but a number of security professionals aren’t aware of it. The primary adopters of CLIC are businesses located in countries that have mandatory data breach notification laws, such as Australia, Austria, Czech Republic, Finland, France, Germany, Mexico, Slovakia, South Korea, Taiwan, and 46 of the 50 states in the United States of America.

The mandatory data breach regulations and CLICs go hand in hand, since it can be very costly for companies to notify affected users. By employing cyber insurance, businesses that are obligated to alert users of a breach can recoup some of their costs. However, considering the increasing number of data breaches and cyber attacks, businesses that are not currently impacted by mandatory data breach regulations may begin adopting CLICs as well.

So what exactly does CLIC cover? At the moment, cyber insurance can include:

• Data breach/privacy crisis management cover: Expenses related to the management of an incident, the investigation, the remediation, call management, data subject notification, credit checking for data subjects, legal costs, court attendance, and regulatory fines.
• Multimedia or Media liability cover: Third-party damages covered can contain specific defacement of website and/or intellectual property rights infringement.
• Extortion liability cover: Losses due to a threat of extortion and professional fees related to dealing with the extortion.
• Network security liability cover: Third-party damages as a result of denial of access, costs related to data on third-party suppliers, and costs related to the theft of data on third-party systems.

It’s important to do your research and determine which cyber insurance coverage is best for your business. Every company is different, so it’s important to understand what cyber risks you may be challenged with and choose the CLIC policy that best addresses those risks. However, utilizing a variety of physical and virtual security methods to protect your network from a cyber attack is the best way to safeguard your business.

Blog Author: Vanessa Hartung