Cyber Insurance: Things to know

Cyber Insurance: Things to know

What is Cyber Insurance?

Cyber-insurance is a type of insurance that  protect organisations from Internet-related hazards, as well as risks associated to information technology infrastructure and operations in general. Traditional business general liability plans often exclude or at least do not expressly describe risks of this sort.

First-party coverage against losses such as data destruction, extortion, theft, hacking, and denial of service attacks; liability coverage indemnifying companies for losses to others caused, for example, by errors and omissions, failure to safeguard data, or defamation; and other benefits such as regular security audits, post-incident public relations and investigative expenses, and criminal reward funds are all examples of coverage provided by cyber-insurance policies.

This article explains why businesses should consider cyber insurance, what a typical policy covers, how to get cyber insurance, how to manage cyber risks, and what the government is doing to help businesses protect themselves.

Why do I need cyber insurance?

You will almost certainly rely on information technology (IT) infrastructure as a firm of any size. If your IT equipment or systems fail or are disrupted, you will be exposed to the risks of business disruption, income loss, damage management and repair, and possibly reputational harm.

While some aspects of existing insurance policies such as commercial property, business interruption, or professional indemnity insurance may cover cyber risks, businesses are increasingly purchasing specialised cyber insurance policies to supplement their existing insurance arrangements, particularly if they:

  • keep critical client information including names and addresses, as well as banking information
  • To run their business, they rely largely on IT systems and websites.
  • as a matter of course, process payment card information

How Much Does Cybersecurity Insurance Cost?

The cost of cyber liability insurance varies based on several factors, including:

  • Coverage limits
  • How many employees can access company data
  • Security measures (e.g. antivirus software)
  • Claims history

The cost of cybersecurity insurance varies substantially based on the coverages you require and the level of risk your company faces. Cyber-liability insurance for small businesses typically starts at $1,000 for a $1 million coverage limit.

Revenue and the volume and type of records a company manages can increase the cost up to $7,500, while major companies that deal with a lot of data can pay tens of thousands of dollars a year.

Speak with a business insurance professional to determine the best coverage for your company. Make sure you do your homework – practically every firm is vulnerable to cyberattacks, and it’s always a good idea to be safe.


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How Do I Apply for Cyber Insurance?

Your company’s best defence against financial loss due to crimes associated with cyber-related security breaches is a cyber insurance coverage. While you may already be aware of this, you may not be aware of the scope of a cyber insurance coverage.

Because there are currently no underwriting guidelines for cyber insurance, the specific coverage you receive will vary depending on the insurance provider and the policy options you select for your company.

As there is no standard form for cyber insurance, the information you will need to supply will vary depending on the insurance company you choose, but in most cases, you will need to provide:

  • General contact information
  • Total number of employees
  • Annual sales or revenue earned
  • Annual sales from online
  • Information you collect from leads or customers (PII)
  • Coverage selection
  • Loss experience within the company
  • Risk control factors within the company
  • Privacy controls within the company
  • Media liability controls

When it comes to buying cyber insurance for your business, you need to choose an insurance provider you can trust.

What does Cyber Insurance cover?

Damage to, or loss of information from, IT systems and networks is covered by cyber insurance. When faced with reputational damage or regulatory prosecution, policies typically entail extensive support with the handling of the issue itself.

Cyber risks are into two categories: first-party and third-party risks. There are insurance packages available to protect either or both of these risks.

First-party insurance covers your business’s own assets. This may include:

  • Loss or damage to digital assets such as data or software programmes
  • Business interruption from network downtime
  • Cyber exhortation where third parties threaten to damage or release data if money is not paid to them
  • Customer notification expenses when there is a legal or regulatory requirement to notify them of a security or privacy breach
  • Reputational damage arising from a breach of data that results in loss of intellectual property or customers
  • Theft of money or digital assets through theft of equipment or electronic theft

Third-party insurance covers the assets of others, typically your customers. This may include:

  • Security and privacy breaches, and the investigation, defence costs and civil damages associated with them
  • Multi-media liability, to cover investigation, defence costs and civil damages arising from defamation, breach of privacy or negligence in publication in electronic or print media
  • Loss of third-party data, including payment of compensation to customers for denial of access, and failure of software or systems

What does Cyber Insurance not Cover

While cyber liability insurance offers comprehensive coverage for your business to protect it against financial losses due to data breaches, there are many situations in which it won’t help you cover expenses after a data breach.

Here are six things your cyber liability insurance policy may not cover:

Bodily injury and property damage claims: Cyber liability does not cover claims of bodily injury or property damage. Businesses need general liability insurance to protect themselves against these claims.

Intentional and dishonest acts: If data is lost due to intentional or dishonest acts by your business, cyber insurance will not cover the damages.

Loss of property: Loss of property, like losing a computer, cell phone, or another electronic device that stores sensitive data, may not be covered by cyber insurance. Instead, loss of property is typically covered by commercial property insurance.

Criminal activity: Cyber liability insurance typically doesn’t cover criminal acts, including employee theft, fraud, or robbery.

Utility failure: Cyber insurance may not cover damages or data losses that result due to utility failures.

Social engineering: Cyber criminals often obtain sensitive data and information via social engineering rather than hacking. Depending on your policy, you may not be covered against damages caused by social engineering.

Step-by-step Procedure to file Cyber Insurance Claim

Cyber insurance claims are an important piece of the puzzle for companies dealing with hacking, fraud, security breaches, and more. One of the key steps in this process is proper documentation and communication. Even if you are not certain your company will end up officially filing a claim, you should still go through the steps of reporting the incident.

When it comes to the actual cyber insurance claims process, it can vary slightly by the insurance company providing your coverage. Typically, there are three parties involved in handling a cyber insurance claim.

  • The insured organization’s defense counsel
  • Broker claims assistance
  • Insurer’s claim team

In the event of a claim, your insurance broker acts as an advocate on your behalf to assist with settlement strategies and to answer any coverage-related questions.

In the immediate fallout of a cyber event, a targeted organization should reach out to their insurer or broker. Prompt notification is essential to ensure efficient mitigation of the loss.


  • Notification of Broker

Get in touch with your broker. When it comes to your insurance policy, your broker is your main point of contact; they should be aware of your situation and how to proceed.

An adjuster will contact you to continue the claims process when you send your broker a thorough list of all the items that were or lost, as well as any images or videos that help to clarify the circumstances.

  • Commencement of Investigation

The investigation into the claim begins. An adjuster will investigate the claim once it has been reported to determine the amount of loss or damages covered by your insurance policy.

The adjuster will also identify any liable parties, and you can help the process by providing any witness information or other parties’ contact information.

  • Policy Review

Once the investigation is complete, the adjuster will go through your policy carefully to determine what your policy covers and does not cover, and inform you of any applicable deductibles that may apply to your case.

  • Damage Evaluation

Your insurance adjuster may use appraisers, engineers, or contractors to provide expert assistance in order to precisely assess the amount of the damage. Your adjuster will provide you with a list of eligible vendors to assist with repairs once the evaluation is complete. It is not compulsory to use these merchants, but doing so can save you a lot of time and effort.

  • Payment of Claim

After repairs have been completed and lost or damaged items have been replaced, your adjuster will contact you regarding settlement of your claim and payment. The amount of time it takes to receive payment will depend on the complexity and severity of your situation.

Read also: Legal framework for the protection of Copyright

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