What is Cyber Insurance?
Cyber insurance is a kind of policy which is referred to as cyber risk insurance or cyber liability insurance coverage (CLIC). It is basically designed to help an organization to mitigate risk related to IT infrastructure and activities. The cyber insurance started catching on in 2005, with the total value of premium forecasted to reach $7.5 billion by 2020.
Examples to Understand the Cyber Insurance
You might relate this cyber insurance to things like flood insurance. If you have, suppose, lots of employees with their personal information that can be taken from the company, then there is a lawsuit there that a cyber liability policy would pay for.
If you have customers and you are collecting their data, that become worse, because through that line, they hack your company which in turn hacks your customers, which in turn hacks their customers and it goes on and on. And the expense cost of handling a situation like that is ridiculous.
Why it is important?
As per the policy, cyber insurance covers expenses related to first parties as well as claims by third parties. However, there is no standard for underwriting these policies. For its importance, the following are some of the common reimbursable expenses.
- Business Losses
Cyber insurance may include similar items that are being covered due to negligence and other reasons. It also includes monetary losses experienced by network downtime, business interruption, data loss recovery, and costs involved in managing a crisis.
- Privacy and Notification
This incorporates required data breach notifications to customers and other affected parties mandated by law, and credit monitoring for customers whose information might have been breached.
- Lawsuits and Extortion
This includes law abiding expenses associated with the release of confidential information and intellectual property, legal settlements and regulatory fines; this might also include the cyber extortion costs, such as from Ransomeware.
So therefore, the value of cyber insurance is crystal clear when the threat is well understood. As per the report, some of the small businesses change their approach to cyber security and begin to understand more proactively, and they will surely create a safer standard for themselves and their customers through this cyber insurance policy.
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