Cyber Insurance 101

Jul 5, 2023 | cyber insurance, cybercrime, cybersecurity

What is cyber insurance

With cybercrime becoming a major threat to businesses across the world, irrespective of their size, cyber insurance is fast becoming more of a necessity than a choice. However, the concept of it is still fairly new and not many SMBs are aware of its benefits. Cyber insurance  covers your liability in the event of your business becoming a victim of cybercrime. For example, a data breach puts you at risk of lawsuits, makes you liable to your customers, vendors, employees and any other parties whose data has been compromised through your organization. It covers the financial aspect of such liabilities, making it easier for you to deal with them.

Why do you need cyber insurance

Many organizations think of cyber insurance as an added cost and believe they don’t need it for various reasons.

Larger organizations think their IT security measures are so watertight they won’t fall victim to cybercrime. They also tend to believe that even if they are affected in a one-off case of cybercrime, they are solid enough to discharge their liabilities and come out of the incident with their brand value intact.

SMBs, on the other hand, think cybercriminals are most likely to target the bigger players and they don’t need cyber insurance. But, in reality, it is the smaller businesses that are at a greater threat–primarily, because:

  1. They lack the resources to strengthen their IT infrastructure and their staff is less likely to be trained in identifying cyber threats, making them more vulnerable.
  2. They are less likely to recover from the damage to their financial and brand health as a result of falling victim to cybercrime.

The bottom line is, every organization–large or small, needs cyber insurance today. However, it is not a replacement for cybersecurity and doesn’t mean you can be lax about cybersecurity. It is meant as a buffer, to help your business survive when something slips through the cracks. Just like any other insurance policy, you will need to answer questions, show due diligence and possibly remediate issues at purchase or renewal. An MSP can help you to understand your IT risks and mitigate them making it more likely you will prevent data breaches and other adverse incidents. They can offer guidance and assist with questionnaires as you apply for and renew your policy.

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