When it comes to protecting your business, having a strategy in the event of a disaster is the first step proactive businesses should be taking. With insurance for fire, theft and others being pretty standard, cyber insurance is relatively new to the market. As with any element in your business, finding the best plan for you can be tricky, and choosing the right companies to provide those services is vital to ensure you are getting the right advice for your business.
Read on to find out What Scottish Businesses Need To Know About Cyber Insurance.
What exactly is Cyber Insurance?
Cyber Insurance is the industry standard for businesses looking to protect themselves against the financial losses from cyber-attacks. This means that the goal of the insurance plan in place is to ensure that your business can continue to operate after the incident by providing compensation to recover or at least reduce the financial losses to a sustainable level.
This, along with cyber security services, can provide protection from potential attacks.
Why do businesses need cyber insurance?
All businesses are digital now, so cyber security has become a crucial element of every business. Gone are the days where cyber security is a nice to have – it is now vital. In fact, the scale of such attacks often means businesses don’t survive the aftermath with 60% of businesses closing their doors within 6 months of a cyber-attack.
Along with lasting damage on the finances of businesses, the reputational damage can also be catastrophic – social media can spread bad news in minutes, and clients will start calling asking how you let their data get into the hands of criminals.
This is why cyber insurance is so important – with financial assistance to maximise recovery and minimise downtime, insurance may also offer support in the investigation, incident response, and legal settlements that follow the attack.
“There are only two types of companies: Those that have been hacked and those that will be hacked.” – Robert S. Mueller, former Director of the FBI
But does my business need Cyber Insurance?
If your business uses, stores, or shares any data, then YES, cyber insurance is something your business needs. Whether you have in-house data, or stored in the cloud, the risk of being attacked isn’t one you can’t afford to ignore. Paired with a cyber security specialist who will minimise the risk of a cyber-attack through proactive security services, cyber insurance offers the financial support that your business may need in such a critical time.
Factors to consider while choosing an insurance policy
As with any insurance policy, it is important to ensure you take advice from your trusted insurance company. Different insurance companies will offer different policies and they will also consider several factors within your business.
These include your annual revenue, your industry, the type of data held and the level of network security you have in place. Certain sectors, such as financial and healthcare, who hold large amounts of sensitive data are more vulnerable to cybercrime and will therefore require a higher level of coverage.
Key factors to consider:
- Risks your business faces
- Types of incidents the policy covers
- What type of coverage and extent the policy offers
- What the policy includes and excludes
- Triggers for activation of the policy
- Cost of an incident and coverage the policy provides
Another vital point to remember is that your security requirements may change according to any changes within your business, so ensure that your policies are reviewed regularly.
What does it cover?
This depends on your insurance provider and insurance plan; however, most cyber insurance policies will cover the first-party and third-party financial and reputational costs if data or electronic systems have been lost, damaged, stolen or corrupted.
For the business involved – the first-party — cover may include the cost of investigating the cybercrime, recovering data, restoration of impacted systems and loss of income incurred by a business shutdown.
Third-party coverages (that result from claims against you) may include damages and settlements, and the cost of legally defending yourself against claims of a GDPR breach.
However, there is never a guarantee that insurance will cover for all losses. This is why it is important to have the measures in place which can prevent cyber incidents from ever occurring in the first place.
Always read the small print
As with any insurance policy, there are always clauses that you need to be wary of before you commit. One clause that some cyber insurance policies include is that the business involved is required to contact the insurer before their IT company in order not to invalidate the policy.
This prevents you from immediately contacting your cyber security specialist who can come in and help your business recover as fast as possible. Some policies even require the Police to be contacted before your security specialist. This may result in the compromised devices being confiscated as evidence, which, instead of minimising loss, increases it due to more downtime. As cyber specialists who understand how much damage and loss businesses can incur from stalling on having a specialist on the case, we suggest you COMPLETELY AVOID these cyber insurance plans
Cyber Insurance as part of your Cyber response plan
With a cyber response plan created by your cyber specialist, the risks that a cyber-attack entails can be significantly reduced, and can save your business from closure.
With cyber insurance as part of your overall cyber incident plan, this preparation is your lifeline in the case of any cyber-attack and could make or break your business.
For more expert advice, get a FREE 30 consultation with our Managing Director Mark Riddell to discuss any cyber security concerns: https://m3networks.co.uk/it-consultation/.