Cyber insurance – an overview
Cyber insurance is now becoming something that most businesses are considering as the reliance on digital assets, methods of communication and flexible working practices become the norm for UK SMEs. GDPR and Covid related lockdowns have seen a massive shift in the importance of data security in businesses and cyber insurance can help manage the risks to businesses.
Cyber Insurance covers the loss or damage to IT systems and networks and the data held upon them along arising from a cyber event, which can include unforeseen issues like faults, malicious or accidental damage as well as cyber-related crime.
All cyber insurance policies are different and you will need to ensure that you speak to a broker who understands your business and the wide range of cyber policies, one size does not fit all, there is not a single product which is best for all clients.
Cyber insurance policies can cover the costs of dealing with a cyber-event. It also covers the costs of getting your business back on track following a hack, data breach or other event.
Some policies can also cover cyber extortion, such as a ransomware attack or data theft. Cyber policies can bring in the right experts to help you manage an event and get you back on track quickly in the most sustainable and cost-effective way.
Cyber insurance policies can cover:
- The costs of investigating, repairing and restoring your own systems after a cyber-event
- The costs of repairing, restoring and replacing your website, networks and data following a cyber-event
- Your lost income if a cyber-event stops you trading and causes a loss of profit
- The costs of telling your customers following a data breach and the legal costs associated with dealing with the ICO
- Your legal fees and compensation costs if you’re sued by a third party for the impact on them following a cyber even in your business.
- The PR costs of managing your reputation and dealing with the fallout
- Breach of copywrite claims, and some online defamation claims from the use of websites and social media.
- Physical loss or damage to computer equipment hardware and software.
The amount of cover required will depend on how much IT infrastructure you have.
It will also depend on the amount of data you hold, what you use it for and how reliant you are on your business. Having some cover is better than having none and businesses need to start regarding cyber insurance as importantly as more traditional physical insurance policies as our businesses quickly evolve into a digital world.
If you are a business who:
- Uses the internet to bank or take payments, connect a card machine to the internet
- Use email or social media to communicate with the world
- Have a website whether or not it is eCommerce
- Store data on other people or businesses
- Rely on electronic databases, cloud software or storage
- Use a computer, tablet or smartphone
The likelihood is that you may need cyber insurance sooner rather than later. In 2019 32% of businesses admitted to having some form of cyber-attack or breach* in their business. In real-life, this is likely to be more than those that admit to it.
With the consequences of a serious breach costing businesses significant sums of money, talking about cyber risk management and investing in training and systems to manage the risk to the business, and then looking at insurance to cover ‘what happens if’, is a serious consideration for all businesses, large and small.
*SOURCE: Department for Digital, Culture, Media and Sport – Cyber Security Breaches Survey 2019: Statistical Release
Getting the advice of a chartered independent insurance broker is critical to getting the right advice for your business cyber insurance needs – find an expert broker you can work with to protect your business from risk.
Business insurance thinking from Yorkshire Powerhouse
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