Cyber insurance covers a broad range of exposures, including hacked computers, viruses, denial of service attacks, and a bevy of other claims. With the right policy, it can be extended to include trademark and copyright coverage. All firms that utilize IT professionals should purchase a cyber insurance policy that is tailored to meet the needs of their own organization.
What is Cyber Insurance?
Cyber insurance can include a number of different exposures from network security which protects against hackers, to claims that you were negligent in meeting your responsibility to protect the data and computers of your clients. The abuse of websites has given rise to unanticipated numbers of copyright and trademark violations.
Most states now have laws that require you to inform your customers when their data has been compromised on your system. Even if no further damage develops, the cost of notification typically approximates $8 per record. In other words, if a hacker successfully penetrates your server housing 150,000 customer records, the cost of notification could be $1.2 million, even if you weren’t negligent.
The availability of cyber insurance has expanded rapidly in recent years. There are now over a dozen insurance companies that offer well structured, competitively priced cyber liability insurance policies. Be advised, however, that coverage is not standard. A well qualified agent, schooled in the technical issues surrounding cyber liability can help you navigate the available coverages.
3 Tips for Building Cyber Insurance Policies
- Know your coverage. General liability insurance policies are designed to protect you if you are negligent, but in order for coverage to be triggered, they require property damage or bodily injury. Cyber attacks typically cause money damages, but to not necessarily physically harm your system. In order to be covered, you will need to purchase a policy that is specifically tailored to your company’s exposures.
- Maintain a strong infrastructure. Insurance companies will only agree to insure you if you take active steps to protect yourself. A formal IT audit of your systems will increase your access to insurance coverage, and can dramatically reduce premiums. The audit will cover a variety of internet security issues.
- Build sound internet procedures that require frequent changes in passwords and that regulate what can be placed on your site. Most copyright violations result from employees posting material from other sites on the web. Make sure that they understand what is and is not acceptable.
A Business Investment
Since many companies will not report incidences of data loss or denial of service attacks, it’s difficult to gauge the frequency of cyber insurance claims. You should use common sense and only cover your company for claims that you can anticipate.
Still, buying cyber insurance is a necessity for companies who deal extensively with technology. Assemble a plan that will cover you so that you can run your business securely.