With the growing instances of cyber-attacks and data breaches, more and more businesses are turning to cyber security insurance, in order to protect their businesses from any kind of loss that they may occur due to such attacks. The popularity and adoption of cyber security insurance are increasing across the world. But still, it is considered a niche product with respect to its coverage, as many businesses are still not aware of the cyber risks they are taking on a daily basis.
Cyber security insurance basically provides coverage to both businesses and individuals from risks associated with the use of the internet and the information technology infrastructure. To put it simply, it protects the insured from losses that may occur due to data breaches, cyber-attacks, network damage, hacking, extortion, data thefts, data destruction, damages due to missing or corrupt data, or business interruption.
Apart from these, it can cover liability resulting from losses caused to others by errors and omissions and a failure to protect data. Cyber security insurance usually provides coverage for first-party losses, although some policies may include third-party liabilities as well. The first-party insurance products typically compensate or mitigate the costs incurred by the policyholder. The third-party products, on the other hand, provide insurance coverage to businesses and also to the people who are responsible for the breach.
The commercial general liability insurance policies, which are extremely popular among businesses, do not cover cyber risks. Therefore, cyber insurance is very important to mitigate losses that might result from cyber-attacks. A strong market for cyber insurance can benefit businesses in several ways. It can promote the adoption of preventive measures by companies, in order to get insured or increase the coverage. This, in turn, can reduce the incidence of cyber-attacks dramatically.
However, many companies do not go for cyber security insurance mainly due to the high costs associated with the insurance policies and also due to a lack of awareness about the insurance and the risks associated with the internet. Moreover, there is a confusion regarding what these insurance products cover. All these factors account for a low adoption of cyber security insurance by businesses.
So, there is a need to increase awareness about the importance of adopting and implementing preventive measures and practices for better cyber security, and how insurance can help avoid losses associated with cyber-attacks. To get covered by cyber security insurance, an individual or business has to undergo a security audit conducted by the insurance company or give documentation prepared with the help of an approved assessment tool.
If you have an online business, if your business accepts any type of digital payment including credit cards, and also stores sensitive customer information and medical or financial data, you should consider buying a cyber-insurance. This insurance can help you conduct your business without worrying about cyber-threats.