Cyber Liability Insurance: Does my business need it?

     A privacy breach can include the loss, theft or unauthorized access to or use of personal customer or employee information.

     There is no doubt the world can be a scary and threatening place in which to do business. Cyber attacks are on the rise. Estimates show cybercriminals unleash 3.5 new threats targeting small and medium businesses every second.

     Small businesses are now the target of 31 per cent of all attacks, a three-fold increase from 2011. And 29 per cent of small businesses have experienced a computer-based attack that affected their reputations, involved the theft of business information, resulted in the loss of customers, or experienced network and data centre downtime.

     Cyber-liability insurance is a must for businesses that have a corporate website and/or an e-commerce website. Generally, the risks you face are dependent upon the size of your business, the number of employees who use Internet technology, the extent and dependency upon e-commerce and the extent of international trading or coverage.

     Cyber-liability insurance is intended to cover claims not covered by traditional insurance and specifically cover cyber-exposures (protections for information and technology related risks).

Benefits of cyber-insurance

     Because the cyber-insurance market in many countries is relatively small compared to other insurance products, its overall impact on emerging cyber threats is difficult to quantify. As the impact to people and businesses from cyber threats is also relatively broad when compared to the scope of protection provided by insurance products, insurance companies continue to develop their services.

     As insurers pay out on cyber-losses, and as cyber threats develop and change, insurance products are increasingly being purchased alongside existing IT security services. Indeed, the underwriting criteria for insurers to offer cyber-insurance products are also early in development, and underwriters are actively partnering with IT security companies to develop their products.

     As well as directly improving security, cyber-insurance is enormously beneficial in the event of a large-scale security breach. Insurance provides a smooth funding mechanism for recovery from major losses, helping businesses to return to normal and reducing the need for government assistance.

     Finally, insurance allows cyber-security risks to be distributed fairly, with cost of premiums commensurate with the size of expected loss from such risks. This avoids potentially dangerous concentrations of risk while also preventing free-riding.

But does YOUR business need to purchase Cyber Insurance?

Then think about these question for a minute, if you don`t have the answer, perhaps you should verify with your IT dept.


What to look for as a cyber insurance buyer

     Lots of well-known insurance companies offer cyber insurance policies, such as Allianz, Chubb Philadelphia and Travelers, to name a few. Insurance industry watchers believe that clients will soon expect cyber insurance to part of every business insurer's product line. However, like any business insurance, cyber insurance coverage varies by insurer and policy.

When comparing policies among insurers, find out what they cover and inquire about the following special circumstances and limits:

* Does the insurance company offer one or more types of cyber insurance policies or is the coverage simply an extension to an existing policy? In most cases, a stand-alone policy is best and more comprehensive. Also find out if the policy is customizable to an organization.

* What are the deductibles? Be sure to compare deductibles closely among insurers, just like you do with health, vehicle and facility policies.

* How does coverage and limits apply to both first and third parties? For example, does the policy cover third-party service providers? On that note, find out if your service providers have cyber insurance and how it affects your agreement.

* Does the policy cover any attack to which an organization falls victim or only targeted attacks against that organization in particular?

* Does the policy cover non-malicious actions taken by an employee? This is part of the E&O coverage that applies to cyber insurance as well.

* Does the policy cover social engineering as well as network attacks? Social engineering plays a role in all kinds of attacks, including phishing, spear phishing and advanced persistent threats (APTs).

* Because APTs take place over time, which can be months to years, does the policy include time frames within which coverage applies?

Tip: Many insurers also offer a checklist of coverage items to compare against their competitors. Use these checklists to add to your list before starting your research in earnest.

How Much Does Cyber Liability Cost?

     Your cost for comprehensive cyber liability insurance will depend on various underwriting factors that allow the insurer to determine your potential risk. These underwriting factors include your type of business (some are targeted more than others), the number of transactions each year, what information you collect, the number of computers or devices, and the type of security you have implemented.

A typical example of insurance costs for the following high target small businesses is as follows:

Healthcare Office: $1,202 per year

Tax Preparation Firm: $1,200

Retail Store: $1,100

     Although your cost of cyber liability will depend primarily on your type of business, annual revenue, and the limit of liability you select, you can expect to pay from $750 on the low end and up to $8,000 on the high end.

     These estimates are for small businesses. Mid-size and large businesses will typically pay many times these amounts because of the exposure to the insurer.

     Also IRMI has a webpage called : "Beware of application errors."  that if you about to purchase Cyber Liability Insurance, well, I think visiting the page could save you money.

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Thank you for reading.

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The references I used to write this article are :

In Conclusion :

wheter you think you need insurance is up to you to decide, I just hope this article has helped you decide.

if you would care to share with your friends.

Thank you for reading

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