Targeted data breaches on businesses cost them an average of $188,000 in 2022, and this is just the first reason why you should be looking for a cyber insurance coverage checklist.
This accounts for recovering the stolen data, patching the vulnerabilities, losing revenue due to downtime, loss of customer trust, damage to reputation, etc.
It’s a staggering figure, but is something that can be covered and compensated for with the right cyber insurance coverage.
However, ensuring you’re selecting the right cyber insurance coverage provider for your business is no small task. It’s something that requires a lot of due diligence, research and investment in time.
But having the right cyber insurance coverage checklist can help you with this process.
In this blog we’re going to break down everything you need to know about selecting cyber insurance coverage, including what exactly cyber insurance coverage is and why it’s so necessary to have for businesses today.
What is Cyber Insurance Coverage and Why is it Important?
Cyber insurance coverage is a type of insurance coverage specifically for cyber-attacks and data breaches. Like other types of insurance, it’s there as a financial safeguard and risk management strategy in case your business suffers from a cyber incident.
Some common things that are covered under cyber insurance policies include:
- Lost income and extra expenses for business interruptions incurred during the recovery process
- Costs associated with incident response
- Notifying affected customers
- Legal costs for regulatory defense and liability
- Ransom payments (though some insurers may not cover this)
Cyber incidents can cost businesses not just financially, but also damage their reputation and trust with customers. Having cyber insurance coverage can help mitigate these losses, allowing businesses to recover more quickly from a breach or attack.
Types of Cyber Insurance Coverage: First and Third Party Liability Coverage
There are two types of cyber insurance coverage that businesses should be aware of: first-party coverage and third-party coverage.
First-party coverage covers the costs incurred by the business directly, such as investigating and recovering from the incident, notifying customers, and lost income during downtime.
Third-party coverage covers liabilities to other parties, such as lawsuits from customers or regulatory fines.
It’s important for businesses to have both types of coverage in their policy for comprehensive protection in the event of a cyber incident.
Now let’s dive into the ultimate cyber insurance coverage checklist to help you select the best coverage for your business.
Your 8-Step Cyber Insurance Coverage Checklist
1. Determine Your Cyber Insurance Coverage Needs
Before shopping around for a policy, it’s important to first determine what exactly your business needs in terms of cyber insurance coverage, and what kind of insurance premiums your budget accounts for.
Consider the types of sensitive data your business holds, the potential risks or vulnerabilities (both internally and externally), your existing security controls and how much coverage you’ll need for possible financial losses.
Your IT and security team can help with this process, as they’ll have a better understanding of where your business may be vulnerable to attacks or breaches.
It’s also a good idea to seek legal advice, review possible fines and penalties (for industry compliance regulations) and speak to all internal stakeholders before beginning the process to find cyber liability insurance.
2. Look for a Cyber Insurance Coverage Provider that Offers Customizable Policies
Not all cyber incidents are the same, so it’s important to find a provider that offers customizable policies to meet the specific needs of your business.
Look for a provider that allows you to add on additional coverage options, such as crisis management expenses or cyber extortion.
3. Understand the Policy Requirements and Exclusions
It’s crucial to fully understand what is covered under the policy, and any exclusions or limitations.
Make sure to read through the policy closely, and ask your insurance provider any questions you may have about coverage or exclusions.
4. Make Sure Your Cybersecurity Measures are Up to Date
Having up-to-date cybersecurity measures in place can not only help prevent cyber incidents from occurring, but it can also make it easier for you to comply with your cyber insurance coverage policy requirements by mitigating potential security risks.
Your insurer may require that certain network security measures be in place before they will provide coverage (such as multi-factor authentication), so make sure to check with them and update your cybersecurity accordingly.
5. Keep Detailed Records
In the event of a cyber incident, it’s important to have thorough and detailed records to support your claim.
Make sure you keep track of any communication with your insurance provider, as well as documents related to the incident and expenses incurred during the recovery process.
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6. Review Your Policy Regularly
Cyber threats are constantly evolving, so it’s important to review your policy regularly to make sure it still meets the needs of your business.
Consider any updates or changes in your company’s cybersecurity measures, sensitive data held, potential risks, and coverage limits.
7. Ensure Compliance with Policy Requirements
Not only do up-to-date cybersecurity measures help prevent cyber incidents, they also make it easier for you to comply with your policy requirements in the event of a claim.
Make sure to regularly review and update your security measures, as well as any employee training related to cybersecurity.
8. Report Incidents Promptly
In the event of a cyber incident (such as a ransomware attack), it’s important to report it promptly to your insurance provider.
Be prepared with all necessary documentation and information about the incident, and follow any steps outlined by your insurer in order to ensure a successful claim process.
Choosing an MSP to Help you Select Cyber Insurance Coverage and Remain Compliant
Selecting cyber insurance coverage can be a daunting task for businesses, but following this ultimate checklist can help guide you in finding the best policy for your needs.
And remember, having a solid cybersecurity plan in place can not only help prevent cyber incidents from occurring, but it can also make it easier for you to comply with your cyber insurance coverage policy requirements.
At the Isidore Group, we have ample experience helping our clients remain compliant to their cyber insurance coverage policy requirements.
With tailored consulting, cyber security planning and ongoing monitoring, we can massively increase the likelihood that you’ll receive a payout from your insurer in the event of a data breach or cyber attack.
To learn more about how we can help, simply schedule a free consultation with us today,