Contemplating whether you should invest in cyber security insurance for your small business? Learn more about the protection offered by this type of insurance, the types of coverage available, and the pros and cons associated with purchasing a cyber security policy in the article below.
- Cyber security insurance minimizes your financial liability in the event of a security breach. Your insurer will cover a portion of the financial loses you suffer as a result of a cyber-attack. There are typically two types of coverage offered by insurers; first party and third party. First-party insurance usually covers damage to digital assets and business interruptions. Third-party insurance covers liability and the costs of forensic investigations, customer notification, credit monitoring, public relations, legal defense, compensation, and regulatory fines.
- Mandatory data breach security notification laws in the U.S. have made third-party insurance a popular option for businesses. The amount of time and resources used to comply with data breach security notification laws can easily bankrupt a business. A third-party policy designed to protect your business’s most important digital assets is a judicious risk-management strategy.
- This insurance coverage does nothing to minimize the damage to your reputation after a cyber-attack. Many businesses sustain irreparable damage to their reputation following a security breach. Your insurance will not help you to improve your image or help you to regain the trust of your business partners, customers, and employees.
- All insurers do not offer the same level of protection and it may be challenging for a business owner to choose the right type of coverage. Since this type of insurance is relatively new to the market, many businesses are not fully aware of what is excluded or included from their policy. There is also a latency in coverage for intellectual and proprietary property. Before purchasing a cyber security policy, make sure you know exactly what is covered.
Who should invest in cyber security insurance?
If you aren’t confident in your IT cyber security protection and would suffer catastrophic financial losses in the event of a security breach, you may be interested in purchasing cyber security insurance. Take the time to thoroughly research your options and find a policy that protects your greatest digital assets.
The bottom line is that adequate protection is your best defense against cybercrime and you are better off investing in a reputable managed service provider to handle all aspects of your business’s cyber security needs. While the insurance will help defray some the financial repercussions of a cyber-attack, it does little to protect your business’s reputation. Use your resources on preventing a cyber-attack, instead of trying to recover from one.