It is increasingly important to protect your client against cyber attacks, but the complexity and novelty of cyber threats make it difficult for both businesses and agents to make smart decisions regarding cyber coverage. Finding the right policy for your client starts by assessing their unique position and the risks most relevant to their business. A greater understanding of the basics of cyber insurance allows you to make an informed decision when advising your clients.
A“cyber attack” covers a broad umbrella of different threats. From sabotage to social engineering, threats continue to grow alongside new technology. The focus of cyber insurance is to protect your clients’ businesses from the fallout of a cyber attack and the steps they must take afterward to return to normal.
A cyber attack might render your client’s business temporarily inoperable. These business interruptions are covered by a cyber insurance policy when they last longer than the minimum downtime specified by the insurer.
Lost profits are not the only expense your client might face. Cyber attacks can damage physical hardware owned by the business such as server farms, office computers, or other systems.
These damages are protected by bricking coverage encompassing the replacement of systems rendered inoperable due to failed updates as well as purposeful attacks.
Businesses may incur costs to restore lost data, remove ransomware, recover from fraudulent transfer of funds and other related problems.
Cyber insurance covers more than criminal activity.
Your policy may also cover costs from legal action against the company such as libel claims, privacy invasion, and plagiarism. These claims must typically arise directly from the media activities of the business on their website, social media, or other platforms.
In the event of a data breach, your client may acquire expenses due to security compromises and stolen data. If customer data is exposed, the business is required by law in most instances to notify all individuals of the breach.
The notification process is expensive on a large scale and following a breach, the business may face regulatory fines and penalties from banks and credit card companies. Your client needs a policy with a provision to cover this expense.
As with any policy, consider the level of coverage required. A small gas station doesn’t need $1 million in coverage for data recovery, but a large data analytics business could exhaust more than a million in a single claim.
Cyber insurance does not reduce the importance of preventative measures.
Cyber insurance goes hand in hand with other internal security measures to provide complete protection for your client’s business.
Security standards, compliance officers, and formalized reporting are steps your client should take to protect their business from cyber threats.
With the myriad of threats facing your clients, wholesalers with extensive expertise are important in the search for cyber coverage.
P.S. Got a client who thinks they don’t need cyber insurance? Here’s why even the smallest businesses need to think about cyber risks.