Cyber Insurance

Sep 8, 2023
Cyber Insurance

Let's look at the importance of cyber security with an analogy. Imagine if you were to travel and stay in a hotel. You don’t want to leave your valuables out in the open, so you lock them away in the hotel safe.

Now, let's say that you never checked whether or not the safe was working properly, and someone broke into it. All of your items could be stolen and gone forever – leaving you with nothing but regret for not taking precautionary steps beforehand. 

This same concept applies to cyber security, as the digital age has created an increased risk of data breaches and other malicious activities. Businesses must now be prepared for these threats by having a comprehensive cyber security insurance policy in place.

What is cybersecurity insurance?

Put simply, cyber security is the practice of protecting digital systems and networks from any malicious activities that could cause harm or disruption. It includes a range of measures, such as encrypting data, implementing multi-factor authentication, and conducting regular vulnerability scans.

Cybersecurity insurance doesn’t just protect against physical threats like theft or data breaches. It is designed to provide coverage for a company’s digital assets and operations, as well as any losses resulting from cyber-attacks.

What does cybersecurity insurance cover?

Cybersecurity insurance works just like any other type of insurance: you pay premiums based on the amount of coverage you want and are willing to pay for. 

In more detail, this type of insurance covers expenses associated with responding to a data breach, such as legal fees, public relations costs, or any costs incurred due to customer notification. It also helps protect businesses from financial losses due to cyber attacks, identity theft, stolen customer information, or even extortion attempts.

Some of the most common things cyber security insurance covers include:

  • First-party loss - This covers any direct costs associated with a data breach, such as business interruption expenses or damage to IT systems.
  • Third-party liability - Anything concerning litigation and other legal fees if you are sued due to a data breach.
  • Cyber extortion payments - Coverage for ransom payments if your company is the victim of a ransomware attack. 
  • Regulatory fines and penalties - If your business is found to be in violation of any laws or regulations related to data security, this type of policy can help cover the associated fines or penalties.
  • Network security liability - Covers costs associated with a business defending their networks against cyber attacks and other malicious activities.
  • Data recreation - Recreating lost or damaged data due to a cyber attack is also covered.

Does my business need cyber security insurance?

Source: Unsplash

No business is immune to the risk of a cyber attack or data breach. Even if you take all the necessary steps to protect your systems, there is still the possibility that something could go wrong. That’s why it’s essential to have a comprehensive cyber security insurance policy in place – so you can ensure your business is protected against any potential losses incurred due to a breach.

Less talked about but almost equally as important, cyber insurance can help businesses and individuals protect their reputations. A cyber attack can have serious consequences for a company's reputation, which can lead to a loss of customers and a decrease in revenue.

Overall, cyber security insurance is a must if your company handles sensitive data, such as credit card numbers or personal information. And it’s also important to remember that cyber security insurance isn’t just for large businesses – even small companies can benefit from it in the event of an attack.

Startups, in particular, should look into a cyber security insurance policy ASAP, as they are more likely to experience data breaches due to their lack of resources and expertise.

How to know what coverage you need

The best way for businesses to make sure they have the right cyber security insurance is by understanding their specific needs and risks. It's important to know what kind of data is stored in your system and how it could be accessed if there were a breach. Additionally, businesses should also consider their budget and the types of threats they are most likely to face before purchasing a policy.

Ask yourself the following questions about your business:

  • What type of data do you store?
  • How sensitive is the data?
  • Are there any potential vulnerabilities in your system that could be exploited by hackers and cybercriminals?
  • Is the data stored on-site or off-site (cloud storage, for example)?
  • What kind of budget do you have for cyber security insurance? 

An audit of your system and a review of current cyber security measures can help you identify any potential threats or weaknesses in your system. With this information, you’ll be able to purchase the right policy for your business.

What to look for in an insurance provider

Source: Unsplash

When shopping around for a cyber security insurance policy, look for one that is comprehensive and covers a variety of potential scenarios. This includes coverage for lost data, legal fees, and expenses associated with notifying affected individuals. Additionally, you should make sure the policy provides protection against different types of cyber incidents such as malware attacks or phishing schemes.

Cyber insurance differs from other insurance policies as it is relatively new and evolving. Make sure you are working with an experienced provider who has the knowledge and expertise to protect your business from any potential threats. 

The provider should be highly rated and accredited by a recognised organisation, such as APRA (Australian Prudential Regulation Authority) and ASIC (Australian Securities and Investments Commission) in Australia.

The startup specialists

With cyber protection, our motto is - prevention is always better than a cure. Upsure can help you manage the cyber security insurance process and ensure you have the right coverage in place. With our expert advice, you can rest assured that your business is protected against any potential threats.

Through our partnership with Entersoft, we can even help companies put the right types of protection in place, such as firewalls, anti-virus software and secure authentication methods.

Curious about our cyber security insurance policies? Get in touch or sign up for free to get started.