Undoubtedly, majority of new businesses based on most of their work and financial transactions online for simplicity and agility in dealing with the dynamics of the market. In addition, the big corporations already are mostly migrated from the legacy systems to the online world for a while now in a way that made all offline transactions outdated and simply obsolete.
Working online is not as heavenly as people might think with no risks whatsoever because if you think so, I believe you might need to reconsider these ideas. To be secure enough while handling customer records, sales, salaries, financial transactions, and many other confidential matters, you must have enough cyber protection against any loss, compromise or theft of electronic data with all that might cause as business and legal hazards for the business.
To deal with these problems, Cybersecurity Insurance, also known as Cyber Liability Insurance or Cyber Insurance, comes into place. Simply put, cyber insurance is a contractual agreement that a company or an organization can purchase to eliminate the financial risks while doing online business in exchange for a monthly or quarterly fee.
How Does Cyber Insurance Work?
Cyber insurance policies can be purchased from the same suppliers of the other business-related insurance that include Errors and Omissions (E&O) insurance, business liability insurance and commercial property. First-party coverage (applying to direct losses for a company) and third-party coverage (applying to losses affecting other entities that have a direct business relationship with the first party).
There are several coverage policies available based on the nature of business and market that the entity exists in and below you can find the most common policies:
- Third-Party (liability) and First-Party Coverage
- Worldwide Coverage
- Distinct Insuring Agreements
- Extended Reporting Period
- First-Party Coverage for Computer Program and Electronic Data Restoration Expenses
- Business Interruption Coverage
What Type of Cyber Insurance Is Appropriate for Me?
Before diving into the types of data insurance to decide on the suitable one for you, we should first define how we can spot a data breach.
If there is an unauthorized access and/or retrieval of any types of data either personal or business-related, then this is a clear data breach that requires immediate reporting as well as an experienced professional approach in handling that situation to close the loophole and prevent it from happening again in the future.
Let’s take the common insurance policies of both first-party coverage and third-party coverage to compare between them and know how to decide on the coverage policy suitable for your specific needs.
If you have only data that is related to your own customers and company records, then a First-Party coverage policy is enough for you. In case of any data breach, the money you take from the insurance company can help you minimize the business and commercial losses as much as possible depending on the size of the breach of course. As a quick reaction to the breach, you can easily notify the customers via SMS, emails or phone calls.
On the other hand, if your company holds data with regard to your own customers as well as third parties, then the Third-Party coverage policy is the appropriate for you. In case of any data breach, the money you take from the insurance company can help you handle the business-related expenses that include costs of court, lawyers, paperwork, settlements, and so on.
Is Cybersecurity Insurance Right for Me?
Data breaches happen and will happen so precautions must always be fully taken to minimize their risks and their costs. Considering a Cybersecurity Insurance is recommended strongly if you store private or confidential business-related data affecting your company or other entities in the event of data breaches.
Cybersecurity attacks are surging and will be surging continually. Under such circumstances, companies should look for the Cyber Insurance program to minimize the damage.