Why You Need Cyber Insurance

Why You Need Cyber Insurance

Insurance companies are constantly drafting newer policies that impose greater burdens and conditions upon corporate policyholders.

Industry professionals are saying that your business WILL be the victim of a cyberattack. It’s just a question of when. Servers, computers, phones, smart devices and more are all susceptible to nefarious incursions. No security program is 100% cyber proof. Extortion demands, stolen identities, legal fees, clients leaving, and other losses can happen if you are breached.

We recommend acknowledging the risk and putting security programs and an adequate cybersecurity insurance policy in place. Most small businesses carry around $1 million in cybersecurity coverage limits.

Here is a summary of some of the coverages recommended.

  • Cyberattack – for expenses associated with virus removal, machine reprogramming, etc.
  • Cyber extortion – to recover from a ransomware attack
  • Data breach – compensates for services to the clients, staff, vendors etc. whose information was breached
  • Online fraud – for direct financial losses from identity theft, unauthorized financial transactions, phishing schemes, etc.

Talk with an insurance professional about the coverage you may need. Coverage is halfway to protection; the rest is ensuring you have proper security programs in place and that each year you correctly answer the questions your cyber carrier asks you about those programs. For both of those items, you need to speak with your IT Professional. If you answer incorrectly, and an attack is successful, you might be left high and dry. That is very important. For example, a survey question may ask whether you have MFA (Multi-Factor Authentication) in place for all access to your networks and data. If you say yes but only have MFA in place for access to your email and a hacker attacks your network via a VPN connection, you may not be entitled to any compensation.

As cyberattacks grow in sophistication, insurance companies are constantly drafting newer policies that impose greater burdens and conditions upon corporate policyholders. Reach out to IT Radix here... we're happy to help!

First published in our October 2023 IT Radix Resource newsletter