What is cyber liability and how to choose the best policy.
With the advance of the Internet of things (IoT), cyber risks grow, and for this reason, all companies and individuals should consider acquiring policies that protect them from these threats.
The news about cyber-attacks is never-ending, cyber threats are becoming the number one commercial risk for organizations of all sizes, from system hacks and ransomware attacks.
While it is true that there are fewer reports of attacks like the one that Yahoo! suffered in 2017, in which the personal information of three billion users was exposed, this is not a reason to lower our guard.
According to McAfee, the economic impact of this illegal activity in countries like the United States is three billion dollars a year.
According to Deloitte consulting, these are crimes that involve fraud, and theft of information and money through digital access.
The main risks are:
- Service interruption
- Access or destruction of data
- Extortion activities in which people request money, access or corporate secrets from companies
- Damage to the company’s reputation
- Privacy risks for customers and employees of the company
For example, the General Data Protection Regulation (GDPR), which entered into effect in 2018, requires US companies to adhere to specific standards of governance and responsibility in the processing and protection of data.
This new legislation also stipulates that, in case of non-compliance, companies must inform the supervisory authority within 72 hours. Failure to comply with these regulations could result in high fines.
While organizations have been busy trying to understand the impact of these new requirements and implementing the necessary steps to comply with them, few are certain that they will be protected against losses in the event of cyber-attacks, data breaches or unintentional non-compliance.
What is cyber risk insurance
Insurance policies are not new for most organizations. However, as risks evolve into cyberspace, policies do too.
The cyber risk or cyber liability insurance helps mitigate risk and uncertainty. In the case of a cyber-attack, the insurance policy will give companies peace of mind and ensure that they can manage a response to keep the business running.
For security system companies, there is also the opportunity to improve cybersecurity by showing this insurance coverage as proof so that their customers know that they follow strict cybersecurity protocols.
Take responsibility for risk beyond insurance
In general, the cost of coverage involves completing a standard questionnaire on IT policies, the hierarchy of the organization, the size of the IT infrastructure and the nature of the business.
Even so, companies cannot rely on this insurance to save themselves from unexpected cyber threats, because the insurance policy only helps to absorb costs in the event of an attack.
Thus, it is necessary for companies to maintain the highest cybersecurity standards, which include the implementation of various levels of defense, such as encryption, authentication, and authorization.
It is also recommended to include the use of several tools to better protect data privacy and the proper installation of devices with secure passwords.
3 key considerations when buying cyber liability insurance
- Identify the risks
Since cybersecurity can cover many facets, it is essential to clearly understand the cyber risks for which the organization needs protection. These may include a variety of computer risks, ranging from data breaches to theft of corporate assets.
When a company is specific about the possible vulnerabilities it needs to be protected from, it is in a better position to find insurance policies that meet the needs of its organization.
- Know what the policy covers
Cyber risk insurance does not need to be independent. Existing insurance policies could be complementary to these new cyber liability policies.
Some companies may request a combination of these products to obtain adequate coverage.
It is important to understand how each product could help you if you are responsible for a data breach since damages can be difficult to quantify and understand.
In the United States, there are insurance companies that offer policies that cover defense and compensation expenses, which include costs related to legal procedures and notification to clients or users, as well as for breach of privacy regulations or for data security breaches.
- Know the claims process
As well as coverage, the claim process is an aspect to consider when purchasing cyber liability insurance. In general, companies can expect to receive monetary compensation after a data breach, which is very useful.
However, each insurance provider has a process to verify the authenticity of the claim and response time to pay the funds.
If a data breach occurs, organizations should know how quickly the funds will be available. Additionally, some insurance companies also offer access to ancillary services such as cyber researchers or public relations. While a company may be busy managing the response to a violation or attack, additional assistance coverage during this process is a valuable benefit.
How to know if you need insurance against cyber risks?
The presence of cybersecurity threats will increase as the demand for data interaction grows. That is why all organizations, should seek cyber responsibility insurance since the greatest benefit is peace of mind in the event of a violation or attack.
It is the sole responsibility of each organization or company to ensure that the best cybersecurity practices are implemented in each project, from installation to maintenance.
They must remain vigilant and have vendors that provide tools and assistance to quickly identify and mitigate risks and keep security systems free of potential vulnerabilities.
To develop a successful cybersecurity strategy, it is important to understand what to protect against. If you are a business owner, it is advisable to protect your organization against a data breach. Cyber liability insurance offers a wide range of possibilities that adapt to every need and budget. If you have any questions, please contact Rafail Insurance and we will recommend the best coverage option for you.
Contact our experienced insurance agents at 713-429-1790. Get in touch with us immediately so we can recommend the right coverage for your home or business.