Cyber Insurance what you need to know about it
Technology advancements such as the internet have no doubt made life easier. You can purchase anything from food to clothes and stay in contact with loved ones at the touch of a button. Online shopping, e-commerce or just about any business who uses electronic data systems, sees people storing their personal information in computer databases – we have access to it all.
These advancements, however, are not all positive, as it means cyber hackers can steal your information from their computer. Hackers steal information for financial, political or just ‘downright malicious’ motives, and cyber insurance is what you can turn to when it comes to covering the damages and recovering your data.
This is where cyber insurance comes in.
Read on to find out what you need to know about cyber insurance.
What is cyber insurance?
Okay, let’s start from the beginning…Cyber relates to anything to do with computers, the internet and information technology.
If your business stores, sends and receives electronic data, then cyber liability insurance cover is something to definitely consider.
Your business most likely stores sales projections and tax records as well as personal details of clients, employees and stakeholders. Such information includes birthdays, emails, contact numbers and banking details.
A business’ electronic data can be:
- lost,
- stolen, or
- compromised
This can result in significant restoration efforts.
Your business can also be liable for damages from third parties if their electronic data is mishandled or stolen from your business computer storage systems. Digitalised personal and public data, is now leaving Australian individuals and businesses more vulnerable. This is why you should look into cyber insurance.
What does cyber insurance cover?
Cyber liability insurance covers financial losses resulting from data breaches and other negative cyber incidents.
There are first-party and third-party coverage available for businesses:
- First-party cover applies to losses sustained by and to your company directly.
- Third-party cover applies to claims against your business by people hurt as a result of your business’ actions or failure to act.
For example, a client of your business can take action if their personal electronic data is insecurely stored and leaked publicly online. A real-life example is the global e-commerce site eBay (link), who was hacked in May 2014, resulting in 145 million user information being compromised! This cyber-attack exposed customer names, addresses, birthdays and encrypted passwords of its users.
Many cyber liability insurances cover losses caused by damage, theft, corruption and/or disruption of businesses electronic data stored on the company computer system. They also cover the above when it comes to the client’s electronic data stored on the company computer system.
Loss of income and extra expenses can also be covered by these policies. This will help avoid, or at least minimise, the costs of a business shutdown resulting from a computer system crash or failure.
These losses of income and extra expenses are different from your usual commercial property policy. You may be surprised that interference of a computer system is unalike damage to physical commercial property.
Computer viruses, cyber extortion and cyber hacks
Cyber extortion coverage applies in the unfortunate instance of a cyber-attack from an online hacker. These people or organisations can threaten an evil attack of cyber extortion if you do not follow their rules (generally involving monetary payment). This coverage can also apply to expenses incurred (with the insurer’s consent) needed to respond to the extortionist, including money paid to them.
For losses to be covered, however, they need to occur as a result of incidents such as a computer virus or cyber hack.
Remember, cyber insurance is constantly evolving. Cyber risks change frequently, and thus, the true risk of cyber-attacks is not completely understood.
Notification costs and rebuilding reputations
Did you know that government statutes and regulations may force your business to notify the parties affected by the cyber breaches? Luckily, these policies can also cover these notification costs. The cover may also include the possibility of hiring an attorney to assess your company’s obligations to rules and laws when it comes to notifying people.
Data breaches have the ability to tarnish a company’s reputation. Current and future clients may decide to take their business elsewhere if they think your business and their data isn’t secure. This is why cyber liability insurance can cover marketing and public relations expenditure to protect and restore its reputation after a data breach too. They’ve thought of everything, right? This is otherwise known as crisis management.
Why do you need Cyber Insurance?
Cyber insurance is crucial for covering the costs of malicious cyber events. You may not think your business needs it now or ever. Hackers don’t discriminate based on the size of the business or who runs it.
According to an Australian Government initiative, Stay Smart Online reported that 60% of all targeted attacks struck small and medium-sized businesses. With an average cost of $276,323 of a cyber crime attack to a business, this should really make you think! Could you afford to cover this?
It may help to consider cyber insurance as an investment, rather than an unnecessary business expense. With many business transactions taking place over the internet, and information no longer paper-based, this is why cyber security is vital.
Peace of mind to your business and your loyal clients is a gift. While cyber insurance may not necessarily prevent a cyber-attack or malicious computer activities, it definitely helps preparing for one.
Consider Cyber Insurance for your business today
With all the technology available in the 21st century, it’s crucial to secure your business’ information technology infrastructure. You have a responsibility to your employees, and clients, to keep all electronic data safe and secured. Worrying about finding the right technologically savvy insurance experts to help you, shouldn’t hinder your decision-making process.
Don’t leave it until it’s too late. Cyber insurance may be the best decision you ever make.
Want to know more cyber insurance for your Perth business? Contact Joondalup, Ocean reef, Wangara Insurance specialists, Grace Insurance today to find out more about protecting your electronic data.
