In 2011 Sony experienced a PlayStation hack breach with costs around $171 million. Sony only had general liability insurance. Sony’s policy only covered the physical property damage not any cyber damages. If Sony had invested in cyber insurance the company could have had that $171 million offset. Cyber insurance is relatively new but, it is a necessity in a world that is becoming increasingly dependent on technology.
What is Cyber Insurance?
Cyber insurance is a policy that helps an organization diminish its risk exposure by covering the high costs that are involved with recovery after any type of cyber breach. Cyber insurance also covers first and third party claims, unlike general liability policies. While there is not one template for cyber insurance policies, the following four are some common expenses that can be covered by cyber insurance.
- Investigation: After a cyber breach it is necessary for the organization to investigate the breach, how to recover from it, and how to prevent it in the future.
- Monetary Costs: cyber insurance can also cover monetary losses due to network downtime or interruption of business, and recovering lost data. It can also cover the company’s cost of repairing reputation damage that occurred because of the cyber breach.
- Privacy and Notification: This includes notifying anyone affected by the breach, including the customers. It also involves credit monitoring for those customers whose information was breached. In many areas this notification is mandatory by law.
- Law suits and Extortion: A cyber breach can be accompanied by the releasing of confidential information, legal settlements, and fines. Covering extortion can also mean that businesses are protected from a ransom war with the hackers.
Why Your Business Needs Cyber Insurance
Despite the high costs associated with a cyber breach, and the vast coverage that a cyber insurance policy can provide, only about one third of companies utilize this form of insurance. Social media and technology are both becoming key factors in the way that businesses reach out to prospects, and maintain their relationships with existing customers. This means that there are more opportunities for hackers to use to launch their attacks on companies. Cyber insurance should be a part of any company’ risk management plan.
Who Needs Cyber Insurance?
Any business that uses an online payment system, maintains and stores its customer information, or uses the iCloud—or something similar—should have some form of cyber insurance. Studies have found that the cost of a cyber breach is substantial, the average cost being 3 million dollars for large businesses, and can increase depending on the gravity of the specific incident. The size of the business does not matter either. Smaller businesses might assume that their size protects them, but in actuality small businesses were the target of 43 percent of all phishing attacks in 2015, according to Symantec.
Technology is a vital aspect of any modern business, but it can hinder the organization by providing more opportunities for cyber breaches. Protect your business from the high costs of hackers with a cyber insurance policy from TJ Woods Insurance Agency. Contact us and get a free quote today!
