New-age enterprises are seen to establish the roots of their business online. With digitization catching up fast, it has become necessary for everyone to revaluate how safe their information is on the internet. While evaluation is the first step, a cyber insurance cover is the best backup that you can have against cyber threats.
What is cybersecurity insurance?
Cybersecurity insurance is modern-day policies that help safeguard the policyholders from damages and financial losses due to systems and networks. These losses might not always be financial in nature, for instance, data leaks, but the insurance companies compensate them. Since the internet has become a crucial part of our lives, right from ordering your monthly grocery to honoring those loan repayments, it is necessary to take adequate precautions to safeguard this information. Almost everyone has a virtual identity on the internet, and it is also necessary to protect the privacy of such related information.
What are the broad categories of cybersecurity insurance?
The rising use of the internet makes the users a victim of cyber events like hacking, cyberstalking, and even digital frauds. This has made cybersecurity insurance a critical aspect to ensure safety. There are two broad categories of cyber insurance –
- Individual cybersecurity insurance: As the name suggests, an individual policy is for the regular and casual users of the internet. This policy protects individuals from security concerns like identity theft, malware attacks, cyberstalking, IT theft loss, and social medial liabilities. This policy is aimed at individual users, and in 2021, it is a must-have for all.
- Cyber liability insurance: Not only individuals but organizations also have large amounts of data about their users. Safeguarding the confidentiality of their user’s information, both personal and financial, is the organization’s duty. This insurance cover protects the organization from data leaks and their consequent liability.
What are the types of losses that are covered under cyber insurance coverage?
For first party losses:
- Loss of data or damage to programs that form part of the digital assets of the organization.
- Losses caused due to downtime of networks result in financial impact.
- Security concerns of cyber extortion also form part of its coverage where third parties seek ransom for releasing or damaging the organization’s data.
- It is a legal and regulatory requirement to notify the customers if any of their data is compromised. A cyber insurance claim includes the costs to notify the customers in the event of such a data breach.
- First party coverage also includes the damages to the reputation of the policyholder (organizations in this case) due to such data leaks.
For third-party losses:
- A data breach that results in defense cost and civil damages is due to third parties form part of third-party cyber insurance coverage.
- Liabilities in the form of publication of information, whether print or electronic, are covered under a third-party cyber insurance cover.
- System disruptions can result in denial of access to customers. The third-party cyber insurance coverage covers the cost of such compensation that may be required to be paid to customers.
Take note of the above losses covered under a cyber insurance plan, and make sure to purchase one to protect your computer network.