Almost all modern businesses rely on digital systems to provide products and services, manage internal processes or engage with customers. Unfortunately, this exposes companies to a wide range of cyber security threats. Malicious actors can target sensitive data and disrupt critical processes and technologies, resulting in considerable financial losses and reputational damage. Specialist cyber security insurance protects businesses against these threats, safeguarding your company and helping you to manage and mitigate any disruption.
What is cyber security insurance?
Cyber insurance protects you against financial losses should cyber criminals target your business. Typically, it covers the costs associated with responding to and recovering from cyber attacks and data breaches. These costs can include legal fees, customer communications, technology recovery and restoration and loss of business. Insurance is a safety net that enables your business to leverage digital systems and technologies safely in the knowledge that you are financially protected.
What businesses benefit from cyber insurance cover?
Cyber security insurance benefits any business that utilises digital systems. However, there is a sliding scale. Those companies that handle large amounts of sensitive data, facilitate financial transactions or rely heavily on digital technology and services may require more extensive cover and should prioritise cyber insurance. Examples of specific businesses that benefit significantly from this type of insurance include:
- IT companies – heavily reliant on digital technologies and often tasked with managing large amounts of data, IT companies are a tempting target for cybercriminals.
- Healthcare organisations – healthcare providers handle sensitive medical data and rely on digital technologies to deliver life-saving care.
- Accountants – manage confidential financial data. Data breaches could result in costly legal cases.
Benefits of cyber insurance
Businesses typically benefit from cyber insurance in several ways. These include:
- Financial protection – covers any costs accrued due to cyber security breaches, such as notification expenses and legal fees.
- Operational assistance – Insurance provides the support required to minimise outages and get your business operating again as quickly as possible.
- Compliance – digital and data management processes are subject to complex regulations and legislation. Insurance can help cover the costs of complying with these regulations in the event of a data breach.
- Managing reputational harm – the ability to cover costs, fund crisis management efforts and respond promptly to cyber attacks can help minimise damage to your brand’s reputation.
- Peace of mind – cyber security business insurance acts as a safety net, ensuring you know you are covered in the event of a security breach.
What it doesn’t cover
While precise wording of your policy will determine what it does and does not cover, there are some things cyber security policies do not typically protect against.
- Pre-existing threats or attacks – cyber security insurance will not cover businesses for specific threats or attacks they knew about before purchasing their policy.
- Third-party systems and data – breaches in any databases of technology that your company does not directly own.
- War and terrorism – policies often explicitly exclude acts of war or terrorism.
- Internal breaches – many policies will not pay out for damage caused by the malicious actions of your employees.
Types of cyber security insurance
Insurance providers often break cyber security insurance into distinct components, allowing businesses to build insurance policies that reflect their unique needs. This ensures you are adequately covered and not over or under-insured while facilitating more competitive pricing. These components include:
Liability insurance
Covers the legal costs associated with cyber attacks, breaches and incidents. It includes cases brought against you by customers or other individuals and organisations affected by the incident.
Business interruption
This policy provides compensation for any income you lose due to cyber disruptions. Depending on the policy, it can also allow for any additional expenses accrued during the restoration of digital systems.
Ransomware and cyber extortion
Covers ransom payments and other similar costs when your business is affected by ransomware or targeted by malicious actors looking to extort your organisation.
Data breaches
Financial protection for the costs inherent in managing and responding to data breaches and other similar events where sensitive information is compromised.
Does my organisation need cyber security insurance?
All businesses that rely on digital systems or collect, store and manage data should consider cyber security insurance. However, the amount of cover you require will depend on specific circumstances. We recommend assessing your exposure to cyber risks and the potential impact an attack or breach could have. Specialist cyber security risk assessors can carry this out if you feel unqualified to do so.
How much does cyber security insurance cost?
The cost of cyber insurance varies considerably from case to case. A sole trader running an online store will pay significantly less than a multinational financial organisation. Factors that determine the overall cost include annual revenue, the size of the organisation, the type and volume of data being processed, and the cyber security protection companies already have in place.
Frequently Asked Questions
Is cyber insurance required by law?
In most instances, cyber insurance is not mandatory. However, it is highly recommended and provides critical financial protection for organisations handling sensitive data.
Does cyber insurance prevent cyber attacks?
No. Cyber insurance is designed to protect your organisation from the financial impact of these attacks.
How do I find the right policy?
Once you have conducted an extensive risk assessment, we recommend contacting our experienced insurance team to discuss your needs, compare policies and find the perfect insurance for you. Insurance experts can simplify the process considerably, making it much easier to understand and navigate the various options.
Protect your business with Park Insurance
At Park Insurance, we benefit from years of industry-leading experience and expertise. Our position as preferred brokers helps us find your business the perfect policy at a competitive price. With generous policy limits and flexible payment terms, our cyber insurance is designed to reflect your business reality and protect your future.
For more information and a no-commitment chat with one of our advisors, contact us today or use our online form below to get in touch.