Is cybersecurity insurance worth the expense?

<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >Is cybersecurity insurance worth the expense?</span>

May 07

May 07

Security

cybersecurity-expert-interview

An interview with a cybersecurity expert

With cybersecurity, a major concern for business today, companies of all sizes are considering cybersecurity insurance. Your customers may have even asked you if it’s worth the investment. Ingram Micro security consultant Thomas Norman’s insights will help you answer their questions and concerns.

Q. What exactly is cybersecurity insurance?
Cybersecurity insurance, sometimes referred to as cyber liability or data-breach liability insurance, helps companies attacked by malware or hackers deal with the incident and recover from it. It addresses damages resulting from the data loss and/or a network outage or service interruption.

Q. What does it cover?
Cybersecurity insurance typically covers direct costs—losses suffered as a result of the incident. This includes:

  • Damaged or lost digital assets, such as data and software
  • Lost business opportunities or increased operational costs due to an interruption of the insured’s computer systems
  • Cyber extortion if the hacker holds the insured’s data for ransom
  • Money stolen through an electronic crime

It also covers the cost of specialists coming in to help isolate the incident and protect evidence as well as expenses involved in addressing the damages.

One of the main advantages of many cybersecurity policies is that the insurance company may furnish an incident management SME to assist in handling the incident. (The insurance company wants to manage their own losses too.)

Q. How expensive is cybersecurity insurance? Do you think it’s worth the cost?
Expect to pay between $750 to $8,000 per year for a small business. Larger firms may pay more. But the cost of even a small cyber incident may typically run over $20,000 and can go into the millions, so the upfront investment is well worth it.

Cybersecurity insurance is a fundamental form of cybersecurity protection, along with protecting the system, the internet connection, the data and the user. All businesses—SMBs, midmarket companies and enterprises—can benefit from it.

Q. Who sells cybersecurity insurance? What’s the best way to go about purchasing it?
Most general business liability insurance firms also sell cybersecurity insurance. A company should start by talking with the insurance firm that already holds the general liability insurance, as cybersecurity insurance may simply require a rider on an existing policy, which will make it much cheaper.

There are many types of cyber insurance coverages. It’s a good idea to seek out the advice of a lawyer who specializes in cyber incidents to review the coverage. This ensures the best possible coverage at the lowest cost.

For more information on the subject, check out these resources:

https://www.dhs.gov/cybersecurity-insurance
http://www.naic.org/cipr_topics/topic_cyber_risk.html

Topics: Security, cyberthreats

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