Cyber insurance is like any other type of business liability insurance; it is specifically designed to help your business recover after you and your business experience a damaging cyber attack and/or a data breach.
Cyber insurance protects from a data breach, it can cover website media, cyber extortion, digital property replacement, cyber crime, business interruption, privacy liability and network security liability. Cyber insurance helps secure the trust of your customers by covering the PR costs related to that peril you are covered for! It can also cover the loss of future sales that arise as a direct result of customer loss to your competitor. Cyber insurance covers your first and third-party risks. ‘First-party risks’ refers to the policyholder’s losses and ‘third-party risks’ refers to the costs and losses associated with any litigious claims veiled upon you by your customers or other third parties.
While you may have business liability insurance, you more likely than not, do not have cyber insurance. As of right now, standard general & professional liability insurance policies lack provisions for cyber even though most, if not all, business today is done online. General liability (GL) policies lack the flexibility to address new and emerging cyber perils.
All businesses rely on systems to conduct their business regardless of the industry. Systems are very critical for day to day operations but their downtime is not covered by standard business interruption insurance. Following a cyber attack, as it brings down the system, cyber liability insurance will be necessary to cover the costs associated with the attack. Cyber insurance can also provide loss profit coverages associated with a systems outage such as computer virus or denial of service attack. Traditional CGL or BOP may not cover this peril that is “non-physical”
Just like we need home/car/business insurance, we should not look away from accepting that in this digital world – we ought to protect ourselves, business & personal – from cyber threats. We don’t doubt for a minute to get BOP or any other insurance policies to mitigate our risks – as individuals and business owners & entrepreneurs, why would we hesitate to get cyber insurance?