Cyber Insurance
As a business owner, you work diligently to protect your assets. Your business’ insurance cover typically looks after the safety and security of your company, your belongings, and your income. However, it would be in your best interest if you considered the wealth you store in your databases and your reliance on technology to keep things running smoothly. To safeguard these assets, you need to invest in cyber insurance.
What is Cyber Insurance?
A cyber insurance policy exists to provide cover in the event of a loss caused by some form of online criminal activities. There are a number of illegal activities the Australian Federal Police list as cybercrimes. These include:
- Computer invasions
- Fraudulently obtaining or dealing in personal financial information
- The creation and distribution of malicious software
- Malware
- Viruses
- ransomware
- Unauthorised damage to electronic communications, including attacks that deny users’ service
- Unauthorised destruction or modification of data
Do I Need Cyber Insurance?
The short answer is, yes, you ought to protect your company with cyber insurance.
Here are some unsettling reasons why cyber insurance is essential.
- The Government announced that Australian infrastructure, organisations, and businesses are under persistent cyber-attacks. The Prime Minister said that these attacks are taking place at all levels of the targeted sectors.
- Australian Cyber Security Centre’s (ACSC) Annual Cyber Threat Report explained that there are reports of cyber crime across Australia approximately every 10-minutes
- The ACSC labelled cybercrime one of the most significant threats Australians face in terms of the high numbers of the crime as well as the devastating impact businesses and individuals experience after being a cybercrime victim.
- Scamwatch discovered that Australians lost an estimated $634 million to cybercrime in 2019. The real-world figure of these losses is likely to be much higher because of under-reporting of the crimes.
- Medium-sized Australian businesses pay, on average, $1.9 million when hit by a cyber crime. Additionally, small and medium-sized businesses are targets of cybercrime 60 per cent of the time.
A Breakdown of Costs Associated With Cyber Attacks
If your business is the victim of a cybercrime, you can expect costs to come from the following sources:
- Crisis Management
- Customer Notification
- Extortion Costs
- It Systems
- Lawsuits
- Regulatory Commission Fines
You must also think about the price you will pay in your company’s reputation, employee morale, and customer loyalty after experiencing a cyber attack.
What Will a Cyber Insurance Policy Cover?
A cybercrime protection policy will cover first-party losses that hit you and your company directly and third-party losses. Third-party losses typically come in the forms of claims brought against you by those affected by your security breach.
What Kind of Crimes Should My Cyber Insurance Policy Cover?
While threats continue to grow and evolve as cybercriminals look for new ways to commit the crimes, here are several risks you should look for in your cyber insurance policy.
- Privacy Breaches
- Business Interruptions
- Damages Caused by a Virus or Hacking
- Multimedia Threats
- Extortion
- Hackers are adept at getting around passwords, encryption, and other kinds of online defences. This leaves you and your customers vulnerable, and you risk losing:
- Employee information
- Personal information
- Confidential client or product information
- Other information held by Internet Service Providers
- These losses leave you open to legal action from wronged parties as well. Most policies will cover the cost of litigation, but be sure you check with your insurance professional to find out if you have cover for this.
While you are in the midst of assessing the damage after a cyberattack, you and your staff may need to take a step back from the normal day-to-day operations of your company. Additionally, the attack could have damaged your systems, wiped out critical data, or made the system unusable. A cybercrime insurance policy can help reduce the cost of damages because you could not do your job.
Cybercriminals continuously find new ways to breach safety measures. The damage can affect your hardware, software, or both. If a hacker plants a virus or does other system damage, your cyber insurance will help make things right.
In our increasingly connected world, all news spreads fast. Unfortunately, this is the case even if the messages shared are entirely false or a distorted version of the truth. Your cybercrime insurance can help cover the costs of fighting in court to restore your reputation as well as Copywrite infringement on trademarked names.
In some cases, cybercriminals can hold your company hostage after accessing your hardware, software, data, and other information you must use in order to make your company run. Typically, the cybercriminals will demand a fee from you before releasing your data. While most cybercrime insurance policies will pay the ransom fee, the cover can also help you pay for necessary crisis management.
What Do Cyber Insurance Policies Usually Exclude?
While it is true that every insurance policy has unique terms, generally, a cybercrime insurance policy will exclude the following:
- Potential Losses: Most policies will not pay you for losses you expect to happen as a result of the cyberattack
- Loss of Intellectual Property: A loss of this nature is difficult to underwrite. As a result, the majority of cyber insurance will focus on you, your company, and your clients
- Improving Your Systems: A cyberattack exposes vulnerabilities in your security. Generally, businesses will upgrade systems and offer enhanced training for employees. While these are useful and recommended activities, the majority of policies will not pay for these improvements.
With so many potential threats to businesses, we here at Grace Insurance strongly suggest that all companies find cyber insurance policies to help protect themselves and their clients from a variety of damage. Do not make the mistake of thinking cyberthreats and attacks only happen to large corporations and could not happen to your company. Plan ahead and contact Grace Insurance to speak with a professional to arrange your protection.
*PLEASE NOTE* The material presented in this article is for informational use only. It does not constitute legally binding advice and is not to be a substitute for a consultation with an insurance professional.
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