Guide To Cyber Liability Insurance

 

If you own a business there are many risks you need to be aware of, in order to make sure you have the right insurance in place. Cyber liability insurance is one of them. No matter how big or small your business is, you are at risk of cyber attacks. Half of UK businesses report having experienced a cyber security breach or attack in the last 12 months, and you could be one of them.

If your business holds sensitive data then you could be a target to cybercriminals, especially in today’s digital age, businesses of all sizes face an increasing number of cyber threats. From data breaches to phishing attacks, the risks associated with cybercrime are significant and growing. That’s why cyber liability insurance is vital for businesses in order to protect themselves against these threats. But what is cyber insurance and what does it cover?

Luckily, East Yorkshire Insurance Brokers are here to help. In this blog we explore what cyber insurance coverage is and what you can do to reduce the risk of a cyber attack, so you can protect your business.

What Is Cyber Insurance?

Cyber liability coverage is a type of insurance that is designed to protect businesses from the consequences of data breaches. Cyber attacks can lead to significant financial losses for businesses therefore this insurance helps cover these losses that result from cyber incidents such as data breaches, ransomware attacks and other cybercrime. Cyber insurance will also cover legal fees and expenses related to restoring data. it’s important that you have this cover in place in the result of this happening to you. 

You’re responsible for your business’s cyber liability insurance, in the same way you would have insurance in place to cover physical threats. If you store sensitive information for example bank details, health records or credit card numbers, then data breaches are a real threat and if you experience one the financial repercussions could be devastating.

What Does Cyber Insurance Cover?

Cyber liability coverage is a safety net against the consequences of various cyber threats that businesses face today and covers data breaches online or offline. By understanding the specific aspects of coverage, you can better appreciate the value of these protections. Here’s a closer look at the covers under cyber insurance that can help safeguard your business from financial and operational disruptions caused by cyber incidents.

Mitigation: In the event of your business undergoing a cyber attack and sensitive information such as names, addressees and payment details are exposed, mitigation coverage helps your business take immediate steps to minimise the damage. This could include hiring cybersecurity experts to contain the breach, implementing additional security measures to prevent further unauthorised access and conducting a thorough assessment to help identify and fix vulnerabilities. The costs covered might include emergency IT services, enhanced security software, and public relations efforts to manage the company’s reputation. 

Ransom demands: If your business falls victim to a ransomware attack where the attackers encrypt all client files and demand a significant ransom, ransom demands coverage provides financial support for negotiating with the attackers and potentially paying the ransom. This coverage can include the costs of hiring professional negotiators, making the ransom payment and implementing additional security measures to prevent future attacks. It can also cover costs related to business downtime and data recovery if the ransom is paid and the decryption key is provided. 

investigation/forensics: Healthcare providers who experience a data breach could have sensitive patient records stolen. Investigation/forensics coverage helps the business hire cybersecurity forensic experts to determine the source and extent of the breach. This involves detailed analysis of the compromised systems, identification of the attack vectors used by the cybercriminals, and assessing the full impact of the breach on the organisation’s data and operations. This coverage ensures that the business understands how the breach occurred and how to prevent future incidents. 

Data recovery: If your data is corrupted due to a sophisticated cyber attack, this can lead to the loss of critical financial records and client information. Data recovery coverage includes expenses related to restoring lost or corrupted data. This can involve retrieving data from backups, reconstructing damaged files, and ensuring data integrity is restored. The coverage may also encompass the costs of data recovery specialists, new storage solutions, and additional IT support needed to restore full operational capability.

Business interruption: If you have an ecommerce website and you experience a cyber attack that leads to your site being taken offline for several days, this can result in significant revenue loss as well as additional expenses to restore services. Business interruption coverage compensates for lost income and extra operating expenses incurred due to the cyber attack. This helps the business cover fixed costs such as payroll, rent, and utilities during the downtime. Additionally, it may cover the costs of setting up temporary systems or outsourcing services to maintain customer service levels while the main systems are being restored.

Who Needs Cyber Insurance?

In today’s digital world, virtually every business can benefit from cyber insurance coverage, but some are at greater risk than others. Anyone can become a victim of a cyber attack, so making sure you have the correct cover in place will give you peace of mind. Especially if your organisation handles sensitive data such as personal customer information, financial records or healthcare details, you may be at a larger risk of cyber attacks and be an attractive target to cybercriminals. Data breaches can lead to severe financial and reputational damage, making cyber liability insurance crucial for any business. 

Online businesses are no different. In fact, they face their own unique challenges. For example, if your website goes down for a period of time due to a cyber attack, your ability to trade is halted, which will result in immediate loss of revenue and potential long term customer trust issues. Therefore it’s important that you have the right cyber insurance in place as this type of cyber attack could be devastating to your business.

Furthermore, it’s important to recognise that anyone can be a victim of a cyber attack. Cyber threats are constantly evolving, and attackers often target smaller businesses as they typically have weaker security measures. Investing in cyber insurance is a proactive step no matter the size of your business, to ensure that you can mitigate risks and recover swiftly from cyber incidents.

How much does cyber insurance cost?

The cost of cyber insurance varies depending on several factors, such as the level of coverage, the size of the business and the industry you’re in. Typically, sums insured start at a minimum of £100,000, which will provide substantial financial protection against a range of cyber threats. Premiums for this level of coverage can vary widely, however, it’s essential to consider the potential cost of a cyber attack compared to investing in insurance.

In addition to the sum insured, policies often come with an excess, which is the amount the policyholder must pay out of pocket before the insurance coverage kicks in. Excess amounts can start as low as £250, making cyber insurance accessible to a wide range of businesses. By choosing the appropriate sum insured and understanding the excess, you can tailor your business’ cyber insurance policies to fit their specific needs and budget, ensuring your business is protected against the real threat of a cyber attack. 

Examples of Cyber Attacks:

As mentioned previously anyone can be a victim of a cyber attack, some businesses are more at risk than others especially if you store sensitive information. With that being said, understanding the types of cyber attacks that can affect your business is crucial. Here are some examples of cyber attack that could happen to you:

Phishing attacks: A phishing attack is a common cybercrime that could target your business. This can involve sending fraudulent emails to you or your employees that appear to come from legitimate sources. These emails are designed to trick you or your employees into sending sensitive information, such as login information or credit card details. This method can be effective at gaining unauthorised access to a company’s system, therefore it’s important that you have cover in place in the result that your business is a target of such phishing attacks. 

Social engineering fraud: Anothing cyber attack that relies on manipulation is social engineering fraud. This form of cyber attack’s aim is to trick individuals into divulging confidential information. This can be done through various means, such as phone calls, emails or even in person interactions. Cybercriminals may pose as trusted figures, such as company executives or financial institutions to mislead employees into providing sensitive information or even transferring funds. Just like with phishing attacks, making sure your staff is aware of such fraudsters can help prevent this cybercrime from being successful.

Ransomware attacks: One cyber attack that is hard to spot is ransomware attacks, which involve malware that encrypts the company’s data, rendering it inaccessible. The attackers then will demand a ransom payment in exchange for the decryption key. These attacks can cause significant operational disruption and financial loss, especially if the affected data is critical to the business’s operations. Since this can be hard to recover from financially, having efficient cyber liability coverage in place will make sure you are covered in the event of your business being a target of such ransom demands.

 Backdoor Trojan: Backdoor Trojans refers to the type of malware that creates a secret pathway into “the backdoor” of a company’s computer systems. Once cybercriminals have access to the backdoor, this allows them to bypass normal security measures and gain remote control over the infected devices without you even knowing. This can lead to unauthorised access to sensitive information, installation of additional malware, or launching further attacks within the network. Backdoor Trojans are often used to maintain long term access to compromised systems, making them a persistent threat. 

Data breaches: Data breaches can occur when an unauthorised person gains access to confidential information, such as customer data, financial records, or intellectual property. A data breach could happen to anyone, and could result from a number of factors such as fraud or your systems being hacked. Data breaches can result in significant financial losses, regulatory penalties and damage to a company’s reputation.

Businesses are required to notify the Information Commissioner’s Office (ICO) within 72 hours of becoming aware of a data breach if it poses a risk to individuals’ rights and freedoms. This notification process includes detailing the nature of the breach, the number of individuals affected, and the measures taken to address it, which can add to the complexity and urgency of managing the aftermath of a breach.

As you can see, there are many forms of cyber attacks that can have devastating effects on your business. Not only are these costly to recover from, but the reputational damage that these attacks can cause can have long lasting repercussions for your company as you try to build trust back up with your customers. Having the right cover in place can make sure that you are able to recover from cyber attacks when they occur, and keep your business afloat.

How To Reduce The Risk Of A Cyber Attack

Not only is it wise to have cover in place in case you’re hit by a cyber attack, you should also be doing everything you can in order to prevent one from occuring in the first place. This is not only good to protect your business even further, but something many insurance companies will expect from you. You may not even be covered if you don’t take the correct precautions. Here are some ways you can reduce the risk of a cyber attack:

Use VPNs: VPNs (virtual private networks) provide a secure and encrypted connection between your device and the internet, which helps protect sensitive data from being intercepted by cybercriminals. By using VPNs, especially for remote workers and during travel, you can ensure that your business communications and data remain private and secure, even when using public Wi-Fi networks. 

Implement antivirus and firewalls: Installing and regularly updating antivirus software and firewalls is crucial for defending against malware, viruses and other malicious threats. Antivirus software can detect and remove harmful programs, while firewalls act as a barrier between your internal network and external threats, monitoring and controlling incoming and outgoing network traffic based on security rules.

Cyber awareness training for staff: Human error is a significant factor in many cyber attacks, especially during phishing and social engineering fraud, therefore making cyber awareness training for staff is essential. Regular training sessions can educate employees about the latest cyber threats, as well as teach them how to recognise and respond to suspicious activities. Topics to emphasise include creating strong passwords, identifying fraudulent emails and understanding the importance of data protection. 

Choose EYIB For Cyber Liability Coverage

Choosing an insurance broker for your cyber security insurance will ensure that you get the cover that you need. Selecting East Yorkshire Insurance Brokers means that you will benefit from expert knowledge as we have 10 years of experience in getting businesses the level of insurance cover that they need. We also offer a personalised service so you feel at ease when deciding on the cover that’s right for you.

We understand that selecting the right cyber insurance policy can be a complex task, given the variety of coverage options and the ever evolving nature of cyber threats. At EYIB we understand the intricacies of cyber insurance coverage, our expertise allows us to provide you with advice so you can stay informed with what best suits your business needs.

Need cyber insurance? Get in touch with us for a free insurance review and protect your business today!

Cyber Insurance FAQs

Is it worth having cyber insurance?

Yes, anyone can become a victim of a cyber attack, no matter how big or small your business is. Having cyber security insurance in place will give you peace of mind that you’re protected in the event of a cyber attack.

What happens if you don’t have cyber insurance coverage?

If you don’t have cyber security insurance you could be put out of business following a data breach. If you are an ecommerce business, you won’t be able to trade if a cyber attack brings your website down. Not only that, but the aftereffects of a cyber attack can be detrimental to companies who don’t have the correct coverage.

Does cyber insurance cover phishing attacks?

Yes, most cyber liability insurance policies include coverage for phishing attacks and the resulting damages.

Is cyber insurance beneficial for small businesses?

Yes, small businesses are often targeted by cybercriminals and can benefit greatly from the financial protection and support provided by cyber insurance coverage.