Let’s face it; the cyberspace is both a master tool and a looming threat for businesses around the world. Despite its obvious marketing and economic advantages, the cyberspace or the internet in all its glory is not free from threats, risks, and security breach occurrences. So, to help combat such occurrences and incidents, businesses can purchase a Cyber Breach Insurance coverage.
Furthermore, with increasing number of cyber security breach cases, many businesses are reaching out for the reassurance of comprehensive cyber breach insurance policies.
Read on to find out everything about a Cyber Breach Insurance so that you can decide if it suits your business.
What is Cyber Breach Insurance?
Cyber Breach Insurance is the name given to a broad spectrum insurance policy.
Businesses can purchase this insurance to protect their companies from damages and liabilities that may arise from:
- Security lapses
- Personal or customer data loss
- Mistakes by employees
- Any malfunctions in the system
- Any virus on the system
- Financial/Revenue loss due to security lapse
- Lawsuits due to breach in security
Moreover, cyber-breach insurance protects the company from any liabilities, complaints, damages and law suits related to the above mentioned types of breach in their systems.
The security cover from the cyber breach insurance policy may cover financial costs or offer other means of protection from lawsuits and negative public relations.
Therefore, when signing up for cyber breach insurance it is best to understand what the policy offers.
There are two widely applied versions of a general cyber breach insurance policy:
- Data Breach Insurance
- Cyber Liability Insurance
Although they are named differently, most terms and conditions in both the policies can be interchanged and customized by the party.
However, there are some distinctive differences in both types of cyber breach insurance that business benefit from as well.
Data Breach Insurance
Simply put the data breach insurance is all about the loss of important data.
If your company collects or works with personal identifiable information (PII) or personal health information (PHI) then you NEED a data breach policy.
Data breach insurance is all about securing the important data that is essential to the functioning of your company.
Hence, the cyber breach security in terms of data breach insurance helps mitigate financial costs, revenue costs, or lawsuits costs and liabilities that may arise if that data is lost.
A company deals with financial and personal information of their customers.
One of the employees forgets to update the virus guard on the system due to which a malware attacks the company’s main computer.
As a result, most of the sensitive and financial information stored on the computer is now lost and can be accessed by any one on the internet.
So how does the Data Breach Insurance help?
- It will help pay for any lawsuits filed against you from the customers
- Pay for any lost revenue due to the breach in data files
- It will also help notify and reach out to a public relations firm to assist you in clearing out any news in media
- Also it will notify and help in settling any customer’s problems with the data loss.
Cyber Liability Insurance
Cyber liability insurance provides financial coverage for cyber-attacks, tech related risks, malfunctions, malware, and ransom ware on a company.
There are 2 types of cyber liability insurances
First Party Cyber Liability Coverage
The first party liability covers the insured company’s financial losses and helps respond to a cyber-breach within the company’s own technology and systems.
A bank stores a lot of sensitive financial information about its customers.
In a cyber-breach situation, the bank’s very own computer systems are not able to protect themselves from a viral malware.
As a result, most of the bank’s customer financial statements are lost or have been deemed unsecure.
Therefore, the ‘first party’ cyber liability coverage will help the bank get coverage to able to pay for the following liabilities:
- The bank can use the coverage to pay for an investigation on their own technology and computer systems
- They can use the funds to pay for any improvements they make in their systems
- Use the funds to notify customers and stake holders
- Carry out effective public relations strategies to mitigate media backlash
Third Party Cyber Liability Coverage
In this type of coverage the insurance pays for any financial claims and lawsuits that have been made by a customer as a result of a cyber-breach or malfunction.
Here, the fault lies with the company who has caused a technological disruption in the information or service offered to the customer.
An IT company is helping customers with their service account management.
In doing so the employee does not recommend a strong password for a client’s service account.
This makes the account vulnerable to hackers or cyber criminals.
As a result, when the account gets hacked the customer can file a law suit or demand a financial compensation for this dissatisfying service.
Thus, in this scenario a ‘third party’ makes a liability claim on the IT Company.
Therefore, the third party cyber liability coverage will help the company pay for the following:
- Financial damage or settlement claimed by the customer
- Lawsuit charges
- Court and Attorney charges
- Public Relations Support charges
Data breach Vs. Cyber Liability Insurance
It is very clear by now that both types of cyber breach insurance policies are vital for the smooth functioning of any organization.
If that particular organization works with customer information and data then it is paramount that it has access to either forms of cyber breach insurance.
However, how can you know which insurance works best for your organization?
It all starts with asking yourself some important questions and critically thinking about the scope of your company.
Organizations need to have clear contracts and technologically protocols to secure themselves.
Nevertheless, data breach insurance policies assists firms with loss of sensitive information after a cyber breach in their systems.
Firms or companies can add services to their data breach insurance, which will help them, recover any lost revenue as well.
On the contrary, a cyber liability insurance is adopted by bigger companies in the tech industry that need more support to recover from cybercrimes, attacks, ransom ware and tech related malfunctions.