What is a cybersecurity risk? Why is cyber liability insurance important?
The concept of cybersecurity is new to many people and businesses; that’s why it’s often overlooked. Nonetheless, cybersecurity is a global problem that is currently posing a threat to locations around the world.
As such, it is essential to ensure that you and your business are protected against the risks resulting from cyber-crime. The best way of accomplishing this is through a cyber liability insurance policy.
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Who is at risk of cyber-crime?
Almost every business, regardless of its size, mostly relies on technology to operate. It’s impossible to enter any office today and miss a computer and an internet connection.
As much as this technology is vital in their daily operations, it also puts them at the risk of cyber-attacks.
Cyber-crime involves a lot of things. For instance, the data or an organization can be hacked, online security breaches can happen, or vital information can be accessed illegally and stolen using computer viruses.
In the recent past, there have been increases in cases of cyber-crime across the world. Many companies are losing billions of dollars every year due to cyber-crime-related activities.
Hackers often target big companies where they can access sensitive user information.
Companies that have recently been attacked include Yahoo, Pizza, Deloitte, and Uber. Any person or business with a digital print is at risk of being attacked. That’s why investing in cyber liability insurance is not negotiable.
What is cyber-crime?
The concept of cyber-crime came into existence as technology – especially the internet advanced. It is a term used to describe different crimes that happen on the internet.
Nonetheless, as far as the business world is concerned, cyber-crime entails the breach of security within your business.
The breach of security may include the following activities:
- Stealing of your customer’s data
- Intellectual property
- Interference with your cloud storage system
- Stealing of passwords for social media accounts and another website
- Identity theft
In most cases, a cyber liability insurance policy will offer coverage for all the above circumstances.
What is cybersecurity insurance?
Cyber-crime is among the fastest-growing forms of organized crime. For example, a survey conducted in 2017 revealed that 37% of all businesses in the United States and the UK were affected by cyber-crime.
Cyber-crime insurance aims to protect businesses and individuals against online-related crimes. By having an insurance cover for cyber-crime liability, you are sure to be compensated if your business suffers a loss due to cyber-crime.
When choosing cyber-crime liability insurance, it is vital to seek advice from an insurance expert. He or she will be able to explain to you what the insurance policy is about and how it will benefit your business.
What is covered by the cyber liability insurance policy?
Most individuals and businesses still don’t know what a cyber liability cover is all about. That’s the reason why most of them don’t bother to get one.
Unfortunately, the increased use of modern technology has put almost every business at risk.
The good thing is that many insurance companies have come up with insurance policies designed to protect businesses and individuals against hackers.
A cyber liability insurance policy can cover a business against various risks, including the following:
- All costs incurred to repair damages caused to a system or website because of a malware attack.
- Expanses used in securing or restoring any lost data or information
- Any legal expenses used to pursue justice in the courts of law.
- All costs are used because of identity theft.
- Cost for repairing damaged computers
- The cost involved in notifying clients about a security breach
Types of cyber liability insurance
Most insurance companies offer two types of cyber insurance policies. The first one is known as first-party, while the second one is referred to as third-party covers.
First-party covers usually pay for the costs you incur as a result of a cyber-attack. This can involve the cost of repairing computers, recovering lost data, and the cost of reconstructing a website, among others.
On the other hand, third-party covers cater to expanses your business or company incurs by paying claims from other companies or people affected by a security breach.
For example: if a customer or client decides to sue your company for negligence, their personal information is stolen.
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Why do businesses need cyber liability insurance?
Cybersecurity insurance is often disregarded simply because a business doesn’t see the need or feels their business line is not susceptible to cyber-crime.
Nonetheless, as long as your business uses computers and the internet and handles sensitive customer information, then a cyber-crime policy is crucial. A cyber-attack can easily lead to the theft of your customer information and cost your business a lot.
The only way to protect yourself from such unforeseen events is by having an insurance cover.
Common cyber risks for businesses
Several internet risks can cause a security breach in your company or business. Let us take a look at some of them.
- Cyber-criminals: These are individuals who intentionally target and attack your website to acquire personal information for different purposes. For example, they may use the knowledge gained to ruin your reputation.
- Data hostage: This is a situation where an individual or a group of cyber-criminals decide to take hostage of your company’s data. They then send threats that they will only restore the information in their original form after paying a certain amount of money.
- Human error: This is where the information or data of a company is compromised due to human error or ignorance. For example, most hackers can send suspicious emails to employees, urging them to click a specific link.
They then use that opportunity to access your website and steal whatever information they want. This form of cyber-crime is also known as phishing.
In a nutshell, the use of computers and the internet has put many businesses at risk. That’s why it is important to have cyber liability insurance to protect against cyber-crime threats.