3 Types of Cyber Insurance You Need to Know About

Cybercrime is more prevalent than ever before. In this new climate, it is crucial for businesses to prioritize cyber insurance. Cyber insurance provides protection against monetary losses that could jeopardize a company's future in the event of a cyber incident. This coverage is particularly important for businesses that handle, transmit, or store sensitive data but all businesses are a target.

Cyber insurance covers financial losses caused by events such as data breaches, cyber theft, and ransomware. For small businesses with limited resources and budgets, cyber insurance can provide critical financial protection, allowing them to survive a cyberattack that could otherwise mean the end of their business.

Many business owners believe that it will never happen to them or that if it does, the damage won't be that bad. The statistics show that the cost of cyber attacks is growing and they are more common than ever. You likely know someone that has been hacked and you likely have already been hacked yourself. Even if you don't know it yet. The average dwell time of a bad actor inside a system before they take action is 80 days. So a hacker could be in your system right now and you likely wouldn't know.

Cyber insurance can be classified into three broad categories: cyber theft insurance, cyber liability insurance, and cyber extortion insurance. Let’s dive into what each of those categories mean.

Cyber theft insurance is a type of cyber insurance that provides coverage for financial losses resulting from digital theft. As more and more businesses store sensitive data online, the risk of cyber theft is becoming increasingly prevalent. This type of insurance can cover a wide variety of cyber theft scenarios, including first-party cyber theft, embezzlement scams, payroll redirection, and gift card scams.

Businesses of all sizes can be victims of cyber theft, and no business is too small to require cyber theft insurance. In fact, small businesses may be even more vulnerable to cyber theft due to limited resources and security measures. Cyber theft insurance can provide critical financial protection in the event of a cyberattack, allowing businesses to recover quickly and resume operations.

When shopping for cyber theft insurance, it's important to carefully review the policy to ensure that it adequately covers your business's specific needs. An experienced IT service provider can help businesses understand their options and choose the best cyber theft insurance coverage for their needs.

Cyber liability insurance is designed to protect businesses from the financial losses resulting from a cyber attack. It includes third-party coverage for damages and losses, data breaches, regulatory penalties, credit monitoring, and lawsuits. Cyber attacks can have severe financial implications for businesses, and the costs associated with a cybersecurity breach can be overwhelming, especially for small businesses. It's common for even the smallest of cyber attacks to cost over $150,000 to mitigate for a 10 person business.

Cyber liability insurance is a critical tool for small businesses to mitigate the risks of cyber attacks. With the right coverage, businesses can recover and move forward after a breach without being financially stunted. It's important to note that even with the best cybersecurity solutions in place, an attack can still succeed. Cyber liability insurance provides an added layer of protection against the financial impact of a cyber attack.

When choosing cyber liability insurance, it's essential to work with an experienced IT service provider who can help businesses understand their options and select the best coverage for their specific needs. Careful review of the policy and compliance with its terms and conditions can ensure that businesses receive complete coverage in the event of a cyber attack.

Cyber extortion insurance, also known as ransomware insurance, is a type of cyber insurance that protects businesses from financial losses resulting from ransomware attacks. Ransomware is a type of malware that prevents access to a computer system or data until a ransom is paid, which can be a significant financial burden for businesses.

Cyber extortion insurance can help cover the cost of ransom payments, recovery expenses, business interruptions, and more. In addition, it can provide access to a team of experts who can help with cyber extortion negotiations and forensics. This type of insurance can be particularly beneficial for small businesses that may not have the resources to handle a ransomware attack on their own. It's common these days for a 30-person business to be asked for upwards of $800,000 in ransom.

When considering cyber extortion insurance, it's important to carefully review the policy to ensure that it covers the specific needs of your business. Working with an experienced IT service provider can help businesses understand their options and choose the best coverage for their needs, reducing the financial impact of a ransomware attack and enabling them to recover quickly.

It is crucial to note that an attack could still succeed even with the right cybersecurity solutions in place to protect your business. That’s why it’s essential to have cyber insurance to help you recover from an attack and reduce the financial impact.

Working with an IT service provider can help businesses better understand their options and ensure they have adequate security measures in place, increasing the chances of receiving complete coverage. It's also worth noting that cyber insurance is a complicated and ever-changing industry, so seeking professional advice is recommended.

To learn more about cyber insurance and why your small business needs coverage, reach out to Digital Fire today. We don't provide or sell cyber insurance. We provide IT services so we can be an objective third party in your corner to make sure that you're getting the best possible coverage and service that your business needs.