Cyber insurance is the last resort you NEVER want to take if you’re a Nonprofit, Tech Startup or Creative Agency
To cyber insurance or NOT to cyber insurance, that is the question…
Cyber insurance is similar to other forms of insurance in its end goal, which is to keep your business afloat when catastrophe strikes.
According to Security Magazine, “Small businesses are the #1 target for cyber criminals, with 60% of them closing within six months after an attack.”
Though cyber insurance can mitigate the financial impact, the best goal is to never need to submit a claim in the first place.
Unlike other insurance types, cyber insurance requires companies to meet certain requirements for eligibility that are nearly impossible to meet without an IT partner. Go figure.
What is cyber liability insurance?
Generally, cyber insurance covers your company’s liability in the event of a data breach that involves sensitive customer information including health records, Social Security, credit card, driver’s license and bank account numbers.
What does cyber liability insurance cover?
Typically, it covers the following:
- Notifying customers about a data breach
- Restoring personal identities of affected customers
- Recovering compromised data
- Repairing damaged computer systems
- Cyber extortion (ransomware payments)
Who should get cyber insurance?
Though Security Magazine reports that, “83% of small businesses do not carry cyber liability insurance,” which is alarming.
Cyber threats and crimes are here to stay because, as we mentioned before, it’s highly lucrative for bad actors.
If you’re working with a managed IT services provider (MSP), make sure they carry cyber insurance as well since they typically face the same attack threats as you.
Why should you get cyber insurance?
To avoid bankruptcy after a cyberattack or security breach.
Once you start looking for cyber insurance, it’s important to find an IT and cybersecurity partner. You’ll need them to make sure you’re in compliance with the technology stipulations of your policy. Achieving compliance is crucial otherwise you may not get a quick and timely claim payout when you need it most.
Also, keep in mind that a managed IT services provider may not be able to partner with you if you don’t carry cyber insurance. This is because they won’t be able to take on the legal ramifications should a breach occur.
Unfortunately, no MSP can promise that they can keep you 100% breach free. As with all things in life there are no 100% guarantees. However, rest assured that they’ll do everything in their power to keep you protected.
Now that you’re armed with more information on cyber insurance, here are the next steps you should take.
- Research and begin conversations with experienced, reputable managed IT providers and cybersecurity experts that you’d like to partner with. Ask them these questions:
- Do they have cyber liability insurance?
- If they give you recommendations but you don’t follow them and a breach occurs, who is liable?
- Does your contract with them include restoration of services or data after a breach?
- Research your top cyber insurance options and discuss them with your IT partner. They will give you good insight so you can make the best decision for your company.
- What was their loss ratio or how many claims have they paid out in the past year?
- Ask them to explain the amount of coverage you need to prevent huge financial losses. (They tend to always be much higher than you anticipate because you’ll need to include costs for investigative services, legal fees, settlement costs and data recovery.)
- Purchase said insurance and work with your IT partner to establish compliance with your cyber security insurance. This is key to ensuring that you’re eligible for a payout if you ever need one.
- This sounds counterintuitive, but avoid filing for a claim whenever possible, as it could lead to higher premiums and other negative consequences. Save your insurance for an incident that threatens to bankrupt you. Instead, invest in working with cybersecurity experts to ensure best cybersecurity practices and behaviors in the first place. Prevention is key. All criminals want easy targets. If you’re not one, typically, they’ll move on.
Looking for more information on cybersecurity?
Lastly, if you’re looking for more ways to stay cyber secure, we invite you to sign up for the replay of our Protect Your People, Data and Devices: Cybersecurity Roadmap for 2021 webinar or reach out to schedule a free consult with us via the form here.