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Cyber Insurance
Cyber insurance offers protection to businesses, whether they’re startups or established organizations, protecting them against cyberattacks and ransomware breaches occurring throughout the policy period. In the event of online fraudulent activities targeting the company’s IT infrastructure, which may compromise customers’ sensitive data like credit/debit card details, account numbers, or health records, the cyber insurance provider steps in to mitigate the financial losses incurred.
What is the meaning of Cyber Insurance?
Cyber risk insurance policy helps protect against cyber attacks. It’s becoming more popular because technology keeps changing, and almost every organization or business is using more online services. Since cyber threats can change a lot, people who have this insurance can adjust their coverage to better meet their requirements.
What is the significance of Cyber Risk Insurance?
As organizations rely more on Internet-based technology for connecting with potential customers and accomplishing digital marketing goals, cyber risk insurance becomes important. The utilization of diverse digital tools exposes these organizations to the potential risks of cyber threats.
Cyber risk insurance for corporations shields the company against losses caused by first-party and third-party liabilities due to cyber-attacks, protecting against financial and reputational losses. This type of insurance provides coverage against cyber extortion, unauthorized access, data breaches, and other threats to protect sensitive customer and employee information.
Given that data security stands as a primary responsibility for companies holding access to their customers’ or users’ confidential data, acquiring this policy becomes imperative, especially for small and mid-size companies striving for market expansion, ensuring the protection of customer information.
What is included in a Cyber Risk Insurance Policy?
Cyber liability insurance protects against the following situations:
Cyber Stalking
The insurance plan covers the expenses involved in prosecuting a criminal case against a third party.
Malware Attack
In the case of a malware attack, cyber insurance covers the expenses for restoring the computer post-attack and the costs of defending against any claims brought by affected parties for legal liability resulting from the malware.
Media Liability Claims
The insurance covers the defense costs of claims made by third parties against the insured, prosecution costs for wrongful media acts, as well as photocopying of documents, and transportation costs to court.
Cyber Extortion
Cyber liability insurance covers the expenses resulting from cyber extortion as well as the costs of prosecuting a third party.
Email Spoofing
The cyber insurance covers the financial loss suffered by the insured due to email spoofing by third parties, as well as the prosecution costs if the insured files a case against the third party.
Privacy & Data Breach by Third Party
Legal fees accrued by the insured due to damages caused by privacy and data breach are covered.
Cyber Extortion
Cyber liability insurance covers the costs incurred due to cyber extortion as well as the prosecution costs against third parties.
What is Excluded in a Cyber Risk Insurance?
Cyber insurance does not offer coverage for the following:
- Electric disturbance, mechanical failure, breakdown of any kind, or media failure that resulted in any loss are not covered by cyber insurance.
- Any willful or fraudulent act violating any law, rules, or regulations by an insured individual is not covered.
- Bodily injury, diseases, death, or damage to any tangible item are not covered.
- Deliberately disregarding any knowledge or circumstances that could form the basis of a claim.
- Damages resulting from negligence or failure to take precautions to protect information such as credit and debit cards, bank accounts, internet connections, etc., are excluded from coverage.
- Unexplained loss or any loss due to a government order is not covered.
- Ongoing legal proceedings before the policy was purchased are not covered.
- Losses resulting from participating in any malicious or dishonest activity are not covered.
- Breach of trade secrets, trademarks, registered patents, actual or alleged plagiarism, copyrights, or other intellectual property is not covered.
- Consequential loss or damage, including loss suffered by any third party, is not covered.
- Any legally uninsurable matter is not covered.
- Loss of any tangible property is not covered.
- Loss in value, theft, or disappearance of cryptocurrency is not covered.
- Purchase of sovereign funds, dealing in securities, federal funds, foreign exchange, currencies, and commodities are not covered.
Who requires Cybersecurity Insurance?
Businesses and organizations with online data, including customer information like credit/debit card details, PII, contact numbers, email IDs, or their own sensitive data, are advised to invest in cyber liability insurance.
Cyber insurance is advantageous for e-commerce enterprises since cyber attacks can result in customer and sales losses. Similarly, businesses that maintain customer data on their websites can obtain cyber coverage for protection.
What is the process for filing a claim under cyber risk insurance?
Follow the steps below to initiate a claim under cyber insurance:
Step 1: Claim Intimation: The insured must inform the insurer promptly upon becoming aware of any cyber incident. Certain insurers collaborate with third-party cybersecurity service providers to facilitate the claim process.
Step 2: Investigator is Assigned: An investigator is assigned to analyze the incident, assess its severity, and devise a temporary resolution plan. The estimated turnaround time for this process is approximately 4-5 hours.
Step 3: Cyber Expert is Hired: If the incident is severe, a cyber expert is hired to conduct the incident analysis. This task cannot be undertaken by in-house cyber experts to maintain transparency and prevent bias.
Step 4: Internal Liaisoning: All relevant parties participate in a resolution discussion, including the insured. Subsequently, the insurer seeks the policyholder’s second opinion on the potential cost of the loss incurred. If a cost-effective option exists, the insurer adopts it. At this stage, the final course of action is determined.
Step 5: All information is re-reported to the claims team. The claims team thoroughly examines all the details and evaluates them for final approval, after which the expenditure is disbursed.
Note: The insured is accountable for disclosing all information that the insurer may consider pertinent for a claim. Neglecting to do so could lead to the denial or postponement of the claim.
What factors should be considered when selecting cybersecurity insurance, and How Much Does It Cost?
For companies aiming to protect against cyber-attacks, cybersecurity insurance stands as a crucial investment. To be eligible, organizations must undergo assessments by IRDAI and furnish documentation demonstrating adherence to government-mandated security standards to obtain coverage.
Upon completion of the security audit, the insurer will communicate the eligible insurance coverage to the company, along with the corresponding premium amount required. Given the novelty of cyber insurance and recent adoption by companies, the premium amount fluctuates from one organization to another.
Suggestions to Enhance Cyber Security
- Implement robust cybersecurity measures. Promptly respond to threats and halt them using suitable anti-malware solutions.
- Incorporate cyber insurance expenses into your company’s budget allocation.
- Improve cyber security knowledge and implement measures to strengthen security.
- Guarantee security and productivity by equipping employees with devices they are familiar with and proficient in operating.
- Enhance security measures by obtaining a suitable cyber insurance policy to ensure uninterrupted business operations.