The post-pandemic era has seen a steep rise in cyberattacks. An analysis of cyber incidents revealed a 125% increase through 2021, with an even higher number noted in 2022. Due to the unpredictability and severity of data breaches and cyber attacks, organizations and businesses have been forced to turn to cyber insurance.
Cyber insurance can help organizations in several ways, including covering legal fees, recovering from the breach, and reimbursements to some extent. The highest claims between 2013 and 2019 were for data breaches and crisis management.
There are several types of cyber risks covered by cyber insurance that can be integral to safeguarding the organization. The Cyber Express has curated a list of cyber risks that are covered when a company is being cyber-insured.
Types of cyber risks covered by cyber insurance
While insurance plays a crucial role in assisting companies in regaining their losses, however, how much is compensated and by when depends on varied policies.
Data breach insurance
Customer information in every industry, including education, finance, health, etc., is required to be safeguarded by companies keeping them. Data handling, processing, storing, and sharing must be private and not lead to exposing it except for the intended recipient. Moreover, they need to follow the right data protection guidelines.
To protect Personal Identifiable Information (PII) and Personal Health Information (PHI) from unauthorized access, companies need data breach or cyber liability insurance. It helps companies to gain insights into breach prevention and response resources. Cyber insurance for data breaches also helps in restoring the personal identities of impacted customers.
It can help pay the insurant for the recovery of compromised data, depending on the policy terms and conditions. Cyber and privacy insurance
Business Interruption Insurance
Business interruption insurance provides cash compensation in case of physical damage caused by events such as devices catching fire. Post the incident, companies are helped monetarily to move to another location, with payroll taxes, loan payments, or if the business shuts down. However, shutting down a business due to a pandemic may not be compensated for by most insurers.
Cyber Extortion Insurance/ Ransomware Cyber Insurance
Cyber extortion makes stolen data inaccessible to the company against which a hacker demands money/ ransom. Companies with cyber extortion coverage get compensated for various costs incurred in such situations. However, this insurance may not cover software errors or vulnerabilities depending upon the policy terms and conditions agreed upon by the insurer and the insurant.
Extortion expenses and payments because of data, a DoS attack, and infection caused by running a malicious code, among others, can be covered by the insurer. Most cyber insurers seek their clients to consult them before making any extortion payments.
A survey found that 37% of 12 to 17-year-olds are the prime targets of cyberbullying. Bullying by spreading rumors, making hurtful comments, racist remarks, posting explicit content, etc. by means of electronic devices constitutes cyberbullying. Cyberbullying insurance covers these online threats including the cost of hiring a lawyer for reasons included in the policy.
Since, cyberbullying can lead targets to have emotional problems like depression, anxiety, self-harm, etc., it may also cover psychiatric care costs, based on the insurance policy.
Intellectual Property Insurance or Copyright Infringement Insurance
If a company is accused of copyright infringement or violating Intellectual Property (IP), the accused may seek monetary coverage from the insuring firm.
Work created by an individual or company that includes design, manuscript, invention, literature, or artwork constitutes intellectual property.
When an insured company is accused of IP theft, they get protection and monetary benefit for legal fees and enforcement coverage. In 2023, there have been over 1000 copyright infringement cases, according to a report.
Regardless of the final verdict, the cost to companies for a legal battle may drain their accounts. Hence, intellectual property insurance helps to some extent.
Cyber Liability Insurance
Cyber Liability Insurance pays and covers a range of cyberattack mitigation costs including litigation, crisis management, forensic investigation, business interruption, etc. Cyberattacks such as DoS, virus infections, hacking, etc., interrupt the systems and may render them blank or inaccessible.
Cyber liability insurance is divided into four parts namely, privacy liability coverage, network security coverage, business network interruption coverage, and error and omissions coverage. This insurance pays for the cost of recovering any data lost in the cyberattack, failure to protect sensitive data, leaked credit card information, loss of SSN, etc.
This policy also covers several costs incurred from cyberattacks, including phishing. The policy covers financial losses borne by the company depending upon the terms agreed by the insurance company and the target. It pays for the legal costs incurred by the victim, including transportation and documentation.
Identity Theft Insurance
Targets of identity theft are those whose personal data has been duplicated to be misused by a scammer to make profit of some kind. If bank credentials are misused, it may be used to withdraw cash; if other records are stolen related to health or insurance, it could be used to make false claims.
Identity theft insurance provides compensation to victims to cover costs related to the recovery process however, the policy may not cover the loss of money as a result of identity theft.