The cyber insurance market is predicted to grow to 22.5 billion dollars by 2025, more than triple what it was worth in 2020 – and for good reason. Cyber attacks against small businesses have increased by over 150%. However, 55% of people said they were less likely to buy from a company that had experienced a data breach, and 60% of small businesses closed their doors within six months of a cyber attack.
This data paints a clear picture of small businesses falling victim to cyberattacks, whether due to a lack of adequate cyber security or lack of cyber insurance. Despite perceptions that cyber insurance is too expensive, cyber insurance can help cover the costs of an attack, minimize downtime, and maintain customer trust.
Let’s talk about what comprehensive cyber insurance covers so you can purchase a policy that fits your business.
In today’s digital-first world, cyber insurance is essential for every business. Whether you store sensitive client data or rely on expensive equipment, a cyberattack can disrupt your operations. With cyber insurance, you can keep your business moving forward with minimal downtime and disruption.
Another reason business owners cited not buying cyber insurance was the need to do more research. We get it – the words “cyber attack” have been thrown around a lot in the past four to five years. However, several types of cyber incidents can constitute a cyber attack. Let’s break down exactly what cyber insurance covers.
A data breach occurs when confidential information is given to someone without the authority to access it. A data breach can occur accidentally or intentionally. A hacker may obtain confidential information, an employee could accidentally leak it, or you may be the victim of a phishing scam.
Phishing is when someone poses as an institution you trust (like a bank) to obtain confidential information, usually passwords or payment information. The global average data breach cost as of 2024 is over $4 million, and a data breach can seriously compromise customer trust.
Data breaches usually occur without our knowledge. Sometimes, a significant breach makes headlines – like the largest ever US healthcare breach in October 2024 to Change Healthcare, a group owned by UnitedHealth Group. Over 100 million individuals had their personal information stolen.
However, breaches happen every day, from casinos to governments and grocery stores. The question isn’t if you’ll suffer a breach; it’s when.
Ransomware is a type of malware that encrypts sensitive information on your computer system so you can’t obtain it. You, the victim, will get a ransom note demanding payment in exchange for your data back. The ransom note is often accompanied by threats of public information exposure or data deletion if you don’t pay.
Transfer fraud often involves scammers posing as trusted entities, such as banks or colleagues, to deceive victims into transferring money to fraudulent accounts. Cyber insurance provides coverage for financial losses and legal fees related to such schemes.
Identity restoration costs time and money, and if you’ve suffered a data breach, it’s essential to get identity restoration done fast for your customers if you want to keep their trust. Identity restoration involves recovering and securing an identity after it’s been compromised or stolen.
This can include disputing fraudulent transactions, notifying banks and regulatory agencies like the Federal Trade Commission, and replacing any documents that may have been compromised, like bank account details, credit card statements, and identification cards like a driver’s license.
Cyber insurance can mitigate the adverse effects of an incident by supporting you in immediate and long-term public relations efforts. Your policy may include coverage for:
Cyber insurance can’t protect you from a cyber attack, but it can protect you from catastrophic customer losses. Showing your customers you care and that you’re doing everything you can to protect them goes a long way – and cyber coverage can help you do just that.
When considering what cyber insurance covers, it’s important to note the difference between cyber coverage and a cyber endorsement. A cyber endorsement is an add-on to another policy rather than a standalone policy.
A cyber endorsement will give you the must-haves of cyber coverage, covering transfer fraud, customer notification, ongoing credit monitoring, and data breaches or ransomware costs.
A full-blown cyber insurance policy will cover costs associated with third-party losses and those related to your losses due to cyber attacks. It will also cover reputation management.
A cyber insurance policy will also have higher coverage limits than an endorsement, meaning that you are much less likely to be in debt due to a cyber attack because your policy is more likely to cover your costs.
Remember that a cyber insurance policy is not cybersecurity. Most policies will have conditions or qualifications for policyholders that require you to meet specific cybersecurity standards to qualify for what cyber insurance covers.
Cyber attacks are getting more advanced, and cyber insurance is rising to meet the challenge. You shouldn’t have to spend any of your time worrying about the fallout from a cyber incident. With comprehensive cyber coverage, you won’t have to.
At CoverHound, we make cyber insurance simple. Protect your business today with our quick 5-minute quiz and get started on your custom cyber coverage in just one click.
Insurance shopping simplified
Insurance shopping simplified
