New-age enterprises are seen to establish the roots of its business online. With digitisation 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 cyber security insurance?
Cyber security insurance are modern-day policies that help to 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 leak but they are compensated by the insurance companies. Since internet has become a crucial part of our lives, right from ordering your monthly grocery to honouring those loan repayments, it is necessary to take adequate precaution 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 cyber security insurance?
Rising use of internet makes the users a victim of cyber events like hacking, cyber stalking and even digital frauds. This has made cyber security insurance a critical aspect to ensure the safety. There are two broad categories of cyber insurance –
- Individual cyber security 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, cyber stalking, IT theft loss and social medial liabilities. This policy is aimed for individual users and in 2021, it is a must-have for all.
- Cyber liability insurance: Not only individuals, but organisation also have large amounts of data about their users. Safeguarding the confidentiality of their user’s information, both personal and financial, is the duty of the organisation. This insurance cover protects the organisation from data leaks and its consequent liability.
What are the types of losses that are covered under cyber insurance coverage?
It is necessary to understand cyber insurance coverage while buying a policy. Let’s look at the losses that are covered –
For first party losses:
- Loss of data or damage to programs which form part of the digital assets of the organisation.
- Losses caused due to downtime of networks that 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 organisations data.
- It is 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 a such data breach.
- First party coverage also includes the damages to the reputation of the policyholder (organisations in this case) due to such data leaks.
For third-party losses:
- A data breach that results in defence cost and civil damages that are due to third-parties form part of third-party cyber insurance coverage.
- Liabilities in the form of publication of information, whether print or electronic media is covered under a third-party cyber insurance cover.
- System disruptions can result in denial of access to customer. A third-party cyber insurance cover covers the cost of such compensation that may be required to be paid to customers.
Take a note of the above losses covered under a cyber insurance plan and make sure to purchase one to protect your computer network.