With cyber-crime on the rise, many businesses are turning to cyber security insurance (otherwise known as cyber liability insurance) to cover their risks and protect themselves from financial harm. That can be a smart move for your business, provided you understand exactly what cyber security insurance does, – and does not cover before signing up.
In some cases, the insurance company will only provide coverage if you already have robust cyber defenses in place. In the end, this type of insurance coverage may only help in cases where your cyber defenses are breached through no fault of your own. With that said, it pays dividends to differentiate fact from fiction when it comes to cyber security insurance. These are the most common misconceptions.
Myth #1 – My Premium Will Go Up if I File a Claim
Many businesses believe their premiums will automatically go up if they file a claim, so they attempt to cover small damages on their own. But the truth is, cyber security insurance isn’t like auto and home.
The premium you pay will only be impacted if and when the claim is actually paid, not when it simply is filed. If your organization has experienced a breach, it’s a good idea to begin the claim filing process.
Doing so will help you gain knowledge along with access to breach notification and a cyber security coach. It’s to your advantage to start a claim pro-actively and then not need it in the end since these resources can help you identify what happened and what you can do about it.
Myth #2 – My Company Is Too Small to Be Hacked
There is a persistent belief that cyber-crime only happens to big companies, but the opposite is often true. Small firms are increasingly finding themselves in the cross-hairs of cyber criminals, and no business is too small to become a victim.
No matter what your size, it’s important for your business to have robust cyber defenses in place. It is also a good idea to follow up those proactive measures with cyber-security insurance, as the policy will provide an extra layer of protection.
Myth #3 – We Outsource Our IT So Our Business Isn’t Exposed
Outsourcing your IT services can be a smart move, but it doesn’t make your business bulletproof. No matter who handles your IT infrastructure, your company still bears the responsibility of protecting customer data and other sensitive information.
You never know what the future might hold, and having this extra layer of protection could prove to be very important.
Myth #4 – We Don’t Handle Sensitive Data
You don’t have to run a medical practice or handle credit card numbers to come in contact with sensitive data. There are many ways cyber criminals entrap their victims, including tricking them into creating phony wire transfers and setting up bogus financial transactions.
From phishing attacks to the threat of ransomware, the dangers are everywhere, and every business would be put in a difficult predicament if their data was held ransom by a cyber-criminal.
Myth #5 – We Invest in Cyber Security So We Don’t Need Cyber Insurance
There is a feeling amongst some in the business community that investing in proactive cyber defenses eliminates the need for cyber-security insurance, but that is clearly not the case. No matter how good a driver you are, you still need auto insurance, and cyber security coverage works in much the same way.
There is no such thing as an unhackable company, and the emerging threats mean that every firm, no matter how well protected, could be at risk.
Myth #6 – My General Liability Policy Will Protect My Company
Another common myth is the belief that a general liability insurance policy will protect a business from damages incurred in a cyber-attack.
Personal liability policies purchased by business owners are designed to protect those firms from claims of negligence, not from claims incurred as the result of a data breach or cyber-security incident. In fact, the standard ISO General Liability form actually has an exclusion for these kinds of losses, so read the fine print carefully and consider adding cyber-security insurance to your to-do list soon.
Myth #7 – Cyber Insurance Is Too Expensive
There is still a widespread misconception that cyber-security insurance is simply too expensive. While premiums are on the rise, the market for network and liability insurance is highly competitive, with affordable premiums and a wide range of coverage options.
In the end, the price you pay will depend on a number of factors, including the risk class you fall into, the amount of coverage you are seeking, the deductible you choose, and the revenue of your company. The good news is that there is affordable cyber-security insurance coverage to be had, so call your agent and get the protection you need. You wouldn’t drive a car without auto insurance, so why let your business remain unprotected?
If you have questions about whether your business is at risk of a cyber-attack, take this quiz to determine your cyber risk pressure from Travelers.
Need help securing your network? Contact Ontech Systems online or by phone at 262-522-8560 to discuss this topic in greater detail so you can have your cyber security bases covered. Or, reach us online to request a cyber security assessment.
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