What is Cyber Insurance?

Cyber insurance protects businesses against the hazards of Data Risk. 

 Data is the most valuable asset for most businesses, and data breach is one of the biggest risks. Cyber insurance protects you from a range of costs that you could incur in the event of a data breach. Business interruption costs. The costs of reconstructing data, defending against lawsuits, providing notifications to people whose data has been compromised all fall under this category. The laws regarding these issues are constantly evolving. There are 46 states with separate laws for information risk. There are federal laws, and international laws that are starting to surpass laws in the United States.

Don't think that by writing this article we intend to generate fear, the way that insurance companies normally do. We are here for the opposite reason, to make you informed and confident.

Examples of data breach include scenarios such as posting sensitive data on your website, breach of customer privacy, intellectual property infringement, virus transmission between computers, employees who lose their laptops or flash drives containing sensitive information, computer malfunction/ employee action that distributes customer information by mass e-mail.   

If your business uses a computer system, you are exposed to data risk every day. If you have a website, you are also in the publishing business, whether you intend to be or not, and anyone can access your content. If your business collects or handles confidential information (like home addresses, social security numbers, people’s names, credit card or bank account details), you are legally responsible for what is done with that info. If you have employees, and you gather their personal information to provide benefits, you are responsible for what happens to that info.

The size of your company does not protect you, especially if you Outsource


Large banks, retailers, and healthcare organizations are known to have this kind of exposure, but so does every other business. Being small or outsourcing to a third party doesn’t isolate you from exposure. Smaller enterprises may be more at risk than large ones. Big firms can usually take a hit and absorb some losses if they don’t have the right coverage in place. But a smaller company that takes a hit like this can be put out of business. 



If you use third party vendors, you are not safe. 


Companies that use third party vendors to handle some of their data – whether it is payroll or customer information – still have exposure. If you collect the data from individuals, you may use vendors to do certain things with it, but the law still looks to you to comply with the issues.


Can you afford Cyber Insurance?

The form you fill out for cyber insurance provides a self-assessment for your current risk situation. The best insurance providers in this field give you access to a stable of professionals who specialize in crisis management, law, and front line breach coaching. When losses do occur, people tend to panic. They realize their reputation is now on the line and the customers and competitors will start to pick up on it. Premiums for run from $2,000 to $5,000 for a million dollars of coverage. Policies in that range that will get you an advocate and a response team to help with any incident. As a smaller company, you want to make sure that someone responds because you don’t have employees on staff who are able to devote their full time to cyber loss forensics.