Cyber insurance has emerged as one of the most important types of corporate insurance a business can invest in. This type of insurance is designed to provide protection for businesses in the event of a malicious hack or data breach of any kind – and in today’s climate, where ransomware attacks and hacks by cyber criminals have affected some of the world’s biggest organisations, it’s easy to see why this type of coverage has become so vital.
Cyber insurance has not been around for long. It’s a relatively new industry, in terms of insurance coverage, and that means policies can vary enormously. If you need to invest in cyber insurance, here are some of the main factors you need to consider;
The two main types of coverage
Cyber insurance is separated into two distinct strands. One type covers ‘first-party’ risks, which means your business is protected in the event of loss or damage to your own data. Depending on your particularly policy, this coverage can extend to investigation of the breach, public relations expenses linked with the issue, and loss of profits during any network downtime caused by the breach.
The other type offers ‘third-party’ coverage, which means liability to clients and regulatory entities will be covered in the event of a breach which affects them. This can cover your legal fees and compensation paid to clients, as well as any regulatory fines you may incur as a result of the data breach.
It’s important to consider which type of coverage you’ll need. If there’s no risk of third parties being affected by a data breach, a policy which extends to third parties would be unnecessary.
Are you already covered?
If you already have another type of corporate insurance, such as professional indemnity, for example, there’s a chance that certain elements of cyber crime may be covered already. However, this will by no means provide full coverage in the event of a malicious hack. Areas where your policy may fall short include cyber extortion expenses, investigation expenses and cover for loss of employee data.
Be sure to analyse your existing policies and look for cyber insurance coverage that fills the gaps.
Key Advice
As mentioned, cyber insurance is still a relatively new product – this means policies can vary widely between providers. Look carefully at what the exclusions of your particular policy are. Common exclusions include the costs to improve internal systems after an attack, loss of unencrypted data, the loss of intellectual property and loss of any future profits or revenue as a result of the breach.
If you’re looking for a cyber insurance policy to ensure you are protected in the event of an attack, contact the team at Morpheus Insurance today. We can provide a full assessment of your needs and ensure you have the dedicated policy you need.
Simon Hammond is Director of Morpheus Insurance Solutions.