Cyber Insurance : Why You Need It

Proliferating cyber crime may compel you to look up the term cyber insurance, which is growing in popularity fast. Before I go into details, let’s just say it’s a means for organizations and individuals to quantify their loss and get coverage against Internet-based risks. Particularly in the nature of loss/theft/destruction of sensitive data or information. The name is pretty obvious anyway.

Cyber insurance is not going to protect your data per se. What it might do in the near future is to reduce the incidences of data theft or more specifically Ransomware attacks. However, it is not as simple as it sounds. Presumably, there would be a lot of paper work and evaluations involved before you can get your data insured.

To begin with, cyber insurance is an insurance explicitly for data theft, damage or loss. Just as any other insurance would work, this one is also liable to the insurance company in case of the stated situations. Apparently, there are many companies and banks (in certain countries) which offer cyber liability insurance. But the big question is- does anyone -particularly organizations – really need it? If yes, then how should you go about it.

So…. Should you get your data insured?

Of course you can get your data insured but that would only make you liable to claim some amount of money against the annihilate data. Furthermore, an insurance against data breach will especially be helpful when it comes to have a sound financial state for business organizations. However, the data won’t be recoverable with cyber insurance.

What all cyber liability insurance covers?

The insurance coveragecan mean different things to different people. Nevertheless, there are 4 basic components that makes up the coverage. These include Errors and Omissions, Media Liability, Network Security and Privacy.

• Error and Omission:This covers all the claims that arise from errors in performance of service. To name a few, technology services which would largely cover software and consulting.
• Media Liability:An advertising injury brings an organization in the spot to claim media liability. To be precise, this would include any breach of copyright/trademark or infringement of intellectual property. Nowadays, this policy is well covered in the general liability policy and is also available as a separate media liability policy. The coverage here is also extended to the offline content.
• Network Security: Among all, this is one of the most important policy and covers many of the prominent issues surfacing around the corner. It is liable to any company if there is a loophole in the network security. The consequence of the situation is consumer data breach, destruction of data, virus transmission and cyber extortion. Any which ways, network security failure causes huge loss to the organizations since consumer data gets hijacked. A claim here promises sure compensation to consumers and helps organization to build up confidence among-st consumers.
• Privacy:Privacy doesn’t only need to network security failure; it also encompasses physical records. These can be files tossed in a dumpster, or human errors such as a lost laptop, or sending a file full of customer account information to the wrong email address.

These 4 components and its liability is well explained in the figure below.

Image Source: https://wsandco.com

What is not covered in Cyber Insurance?

While cyber liability insurance covers most of the aspects, but there are still some areas for which insurance companies doesn’t hold any liability.

• Reputation harm.
• Loss of future revenue
• Lost value of own intellectual property
• Costs to improve internal technology systems.

Data Backup over Cyber Insurance

Cyber insurance is a sure way to pay all the liabilities an organization incur if there is any data breach. However, data backup helps you stand in a rather secure position. Even if the is such situation, you can instantaneously turn up and retrieve lost data from the backup plan.

How data backup is a better plan?

In simple terms, backup is considered as the safest means to protect data. You always have your data in a rather secure flank. Apart from this, you can rely on backup plans for many other reasons.

• More often than not, it’s THE CHEAPEST means to retrieve your lost, damaged or stolen data.
• Recovery is quick with backup, like you can have any of your documents in hand instantly.
• There are various offsite means to create backup, for instance- Dropbox, Google Drive, USB Flash drives, Right Backup app and many more.