Is Cybersecurity Insurance Worth It For Smaller Businesses?
With so much of our life, business, and transactions taking place online, it stands to reason that the data we share and store is growing more extensive as well. There’s a certain comfort level these days too with sharing even the most sensitive info, from credit card numbers to patient details within a medical system. We do it so often, and it’s easy to feel like nothing will go wrong. What are the odds, right?
Until it does.
Cyber attacks and data breaches are an ever-increasing problem, making it essential that you have measures in place to protect yourself, your clients, and your team. This starts with the right security support, but you also have to think ahead and plan for the worst-case scenario. What happens if there is a ransomware attack, with perpetrators holding data hostage until they’re paid? It happens more often than you might think.
Okay, but what if you don’t have sensitive data? If there’s no real value, you’re not at risk, right?
Hackers understand that even if there isn’t monetary value connected to your assets, there IS monetary value connected to your time and operations. Sometimes their goal is purely to freeze your systems and network, preventing you from accessing vital records or programs until you pay in full. You have to consider the compounding expense of lost time and resources, plus the cost of system recovery.
Your first line of defense is to maintain cutting-edge cyber security measures and protocols. But should the unthinkable happen, you also need to make sure you have the right cybersecurity insurance coverage in place as well.
What is cybersecurity liability insurance?
In other words, it factors in the associated costs and what you could stand to lose, and then provides a layer of monetary protection. Like any insurance policy, it’s something you need to have but hope to never use.
What does cybersecurity insurance protect against?
The financial value of potential downtime needs to be considered as well, helping you to choose the right policy coverage to offer real benefits. With that said, here’s a closer look at what your cyber insurance policy could cover in the event of a cyber incident.
Doesn’t really sound too technical, does it? Bricking is when your system, network, servers, or devices are completely paralyzed by a cyber attack. They’re no more useful than a brick. As we touched on above, this can be just as expensive (if not more expensive!) than an outright theft.
2. Loss of revenue
Lost productivity equals lost money. Your policy should provide coverage to minimize the financial impact.
3. Recovery and restoration
A cybersecurity plan should have backup and disaster recovery protocols in place, but this takes time and money. These costs can be offset by the right policy.
4. Lawsuit liability
In a worst-case scenario, you could be vulnerable to lawsuits filed by anyone whose information was compromised (or otherwise negatively impacted) by your cybersecurity attack. If any regulatory compliance issues are found, you can be especially at-risk. Once again, this is a prime example of why it’s critical to have your bases covered and take any risk management steps that you can.
What are the benefits of cybersecurity insurance for your business?
- Covering immediate and extended costs. You might find a quick resolution to your attack, but the ongoing effects and restoration can be expensive.
- Protection against cyber extortion. Lessen the cost incurred by a system, network, or files being held hostage.
- Legal support. Insurance companies don’t want to pay unless they need to, meaning that you often will receive professional counsel and help to drive down costs (including legal costs). It’s a mutually beneficial system.
- Analysis of vulnerabilities. Since prevention is the best approach for all parties involved, your insurance provider in many cases will help you explore vulnerabilities and better protect yourself.
- Incentivizes cybersecurity measures. We all need a little nudge now and then, and policy rates might be just the nudge you need to find a cybersecurity provider. In the long run you have everything to gain and nothing to lose.
Are there any downsides to cybersecurity insurance?
- Paying for a policy you’ll never need. Technically this is a downside, but it’s also an outcome that you should really hope for. We have car insurance, but are you ever disappointed to not be a fender bender?
- Insufficient policy coverage. One policy certainly does not fit all. We recommended carefully reviewing the details, and taking the time to work with a provider who understands your unique needs. Few things are more aggravating than counting on coverage, only to discover that your event falls outside your policy’s umbrella, or that the umbrella is too small to be of real value.
- Coverage can be expensive. Especially if you are in a high-risk industry, or have particularly valuable operations, your policy could be a sizable investment. Just remember to avoid sticker shock by weighing it against the long-term costs of downtime, ransomware, and potential lawsuits.
Is cybersecurity insurance right for me?
We’ve seen firsthand the devastating impact that a cybersecurity attack can have, especially if the right controls, plan, and coverage aren’t in place to mitigate the damage. We would, however, advise against purchasing a policy blindly. Work with your IT provider and/or team, carefully selecting a policy that covers your best interests and needs, in concert with a thorough cybersecurity plan. In this day and age, it’s essential.
Have more questions about cybersecurity and how to protect your assets? Contact us today with any questions and to discuss the right solutions for your business or organization.