Cybercrime is predicted to cost the world $9.5 trillion in 2024 and $10.5 trillion annually by 2025.1
Cyberattacks are a threat to your company that you cannot afford to overlook. Cyberattacks pose a significant risk to businesses, large and small, across all industries. You need to protect your company from these malicious attacks that can disrupt business operations, lead to financial losses, cause reputational damage, and erode the trust of your customers and partners.
What is Cyber Insurance?
Cyber insurance, also known as “cyber risk insurance” or “cyber liability insurance,” is a specialized policy designed to protect businesses from cyberattacks.
The insurance industry has evolved rapidly in response to the ever-changing cyber threat landscape. Cyber insurance can cover various cyber risks, including but not limited to ransomware, privacy liability, crisis management, and more. We customize your policy based on your specific needs.
What are the Types of Cybersecurity Insurance?
Most cyber insurance policies can be separated into two areas — first-party coverage and third-party coverage.
First-Party Coverage
First-party cyber insurance covers your company’s financial losses resulting from the cyber event. These are the costs associated with you—the money your business has to pay following a cybersecurity attack or breach on your network or systems. First-party cyber insurance coverage may be bundled with errors and omissions insurance. The majority of cyber insurance claims come from first-party losses. Costs may include:
- Business interruption–Costs that result when the policyholder cannot conduct normal business due to the cyberattack. Coverage may include loss of income and other costs.
- Cyberextortion threats– Costs associated with the payment of a ransom to save the company from further damage. Ransomware is a typical example.
- Customer notifications– Costs associated with notification and customer communications after a breach. Often, a third-party company must be brought in to handle this task.
- Public relations– Costs associated with restoring a business’s reputation.
- Loss of data and restorative work– Costs covering data recovery to repairing or replacing damaged equipment due to the breach.
- Fraud and theft– Costs arising from the destruction or loss of data due to theft, fraud, etc. This may include credit monitoring services or anti-fraud protection to mitigate the risk after an attack.
- Forensic Investigation– The costs associated with the forensic investigation into the attack and the technical and legal services required to meet the standards of the presiding court.
Third-Party Coverage
Third-party cyber insurance covers you for liability actions that are taken against you following a cyber event. This could include clients, vendors, and regulators—anyone who wants money from your business due to an incident. For example:
- Network security and privacy liability: Protects your business from liability claims and legal costs resulting from a cyberattack data breach, including claims from affected customers or partners.
- Regulatory and legal defense: This covers the legal costs of defending against regulatory investigations and lawsuits related to a data breach or cyber incident.
- Media liability: Protects against claims of defamation, copyright infringement or other intellectual property issues arising from online content.
- Recoupable costs may include:
- Attorney fees
- Settlement costs
- Payment of court-ordered damages
- Costs associated with responding to regulatory inquiries
- Government fines and penalties
Cybercrime Events Coverage
Cybercrime event insurance may cover additional losses your company may suffer due to a cyberattack.
- Computer and funds transfer fraud: Cybercriminals often deceive businesses into transferring funds to fraudulent accounts. This coverage helps recover the stolen funds or covers the financial loss resulting from such fraudulent activities.
- Social engineering fraud: This form of cybercrime involves tricking employees into harmful actions, like divulging sensitive information or transferring money, and cyber liability insurance can help protect your business against such losses.
Why Do You Need Cyber Security Insurance?
With the staggering losses from cybercrime, companies understand the urgency to prioritize cybersecurity and consider preventative measures, such as investing in cyber insurance. Callahan Risk can protect your company from this evolving and growing risk.
