Cyber Insurance Coverage Checklist: 5 Key Things To Look For
Purchasing cyber insurance has become increasingly important for businesses of all sizes. Not only are organizations transacting online more, but they are more reliant on technologies to power those transactions than ever before. This opens the business up to risk, from both external hacks and internal breaches.
From real estate companies to health care services, your operations could grind to a halt if your systems experienced a cyber-attack. This is why purchasing a cyber insurance policy is so important. But are all policies created equal? Nope. In this article, we provide a cyber insurance coverage checklist to help you learn what to look for in a policy to ensure your business is protected if an attack occurs.
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Here are the five questions to ask when looking for cyber insurance coverage:
1. Does the policy cover ransomware?
One of the most common ways to attack businesses, both large and small, is with ransomware. This is a form of malware that infiltrates your computer systems and encrypts all your critical business data, blocking you from access. To unlock your data, you have to pay the attacker, usually in cryptocurrency.
Many—but not all—cyber insurance policies cover a ransomware attack. Make sure to know how your policy will respond to ransomware claims.
2. Does the policy cover lost income while your systems are down?
The next item on the cyber insurance coverage checklist relates to your financial protections. After a data breach, your computer systems might not be functioning, or you might have had to turn them off completely. Regardless, cyber insurance can cover the net income you lost when your computer systems were down due to a cyber-attack. Often called "business income" or "business interruption" coverage, it will pay for the period of time when your systems are being restored.
3. Does the policy cover lost income if one of your software vendors is hacked?
While you might not directly experience a cyber-attack, a hack of one of your software vendors can result in an outage or system failure that leaves you unable to conduct business for a lengthy amount of time.
If you rely on any software vendors to run your business, many cyber insurance companies will offer coverage that pays for your lost net income while your vendor's systems are being restored. This coverage is usually titled "dependent business interruption" in your cyber insurance policy.
4. Does the policy cover wire transfer fraud or social engineering?
Cybercrime is an optional coverage under most cyber insurance policies, meaning you should not assume your policy automatically includes this coverage. Cybercrime is defined in many ways, but most often refers to when an attacker tricks you or an employee into fraudulently wiring them money or shoring sensitive company information like credit card info.
Typically, one of your employees will get an email from someone pretending to be a company executive or vendor who requests money be sent to them. It isn't until after the money is transferred and the criminal is long gone that the business realizes it has been tricked.
Although this sounds implausible, it happens to businesses all the time. In fact, you and your employees probably get these fake emails on a weekly basis—most of the businesses we talk to do.
If you want protection from this type of attack, make sure your cyber insurance policy includes cybercrime or wire transfer fraud.
5. Does the policy cover all data breaches, not just digital?
Privacy and data breaches can take many forms. For example, if an angry former employee or a thief stole sensitive files from an office, a ton of confidential information could be at risk of being leaked.
A quality cyber policy covers liability arising from data breaches that aren't just the result of a cyber-attack; it should be a fully encompassing privacy liability insurance policy.
Cyber insurance is a necessary coverage for many businesses that operate digitally or store sensitive information on their network systems. If you are looking for pricing or wondering what cyber insurance covers, call us or start an instant cyber quote online.
About The Author: Austin Landes, CIC
Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.
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