Let's talk about Shelby. Shelby runs a successful online artisanal soap store, priding herself on quality and attention to detail. So when an email lands in her inbox from a customer complaining about a recent purchase, she's ready to make things right.
But something feels off. The email is written in broken English, and the customer is demanding a refund without returning the product. Shelby digs a little deeper and discovers her website has been hacked. An attacker has stolen customer data and is using it to make fraudulent purchases.
Panic sets in. The cybercriminals have locked her out of her own website and are demanding a hefty ransom to release it. How does she even begin to recover from this?
Stories like Shelby’s show exactly why cyber insurance is a critical part of any business's security plan. It’s not just about protecting your finances—it’s about protecting your reputation and your future.
What is cyber insurance?
Think of cyber insurance as a seatbelt for your business's online security. You wouldn't drive without one, so you definitely shouldn't navigate your connected business without this financial protection in case of a cyberattack.
A policy can cover a range of expenses your business might face if your data is compromised, including:
Extortion payments from ransomware attacks
Notifying customers of a security breach
Legal fees and fines
Hiring experts to recover lost data
But let's be clear: cyber insurance is a backup plan, not your main line of defense. You still need solid cybersecurity measures in place to prevent an attack from happening in the first place.
Understanding cyber insurance coverage
Cyber insurance isn't a one-size-fits-all product. Coverage is typically broken down into two main categories: first-party and third-party.
First-party coverage
This covers the direct financial losses your business suffers from a security incident. Key areas include:
Business Interruption: Compensates for lost income and extra expenses if your business has downtime after a cyberattack.
Data Recovery: Covers the cost of restoring, recreating, or recovering data that has been lost, stolen, or corrupted.
Cyber Extortion: Reimburses for ransom payments made to end a ransomware attack or other extortion threat. This is not always the case, keep in mind every policy is different and you should read the fine print.
Incident Response Costs: Covers fees for forensic investigators, legal counsel, and PR firms to manage the crisis.
Third-party coverage
This protects you from claims and lawsuits filed by others (like customers or partners) who were affected by a security breach at your company. This includes:
Privacy Liability: Covers costs related to lawsuits from customers whose personally identifiable information (PII) was compromised.
Network Security Liability: Protects against claims that your security failure caused financial harm to others, like spreading a virus to their systems.
Regulatory Fines and Penalties: Covers fines from regulatory bodies (like under GDPR or CCPA) resulting from a data breach.
Common cybersecurity requirements
Want to qualify for a policy? Insurers will expect you to have specific security measures in place.
Endpoint Detection and Response (EDR): Continuously monitors all devices on your network to detect, investigate, and respond to threats. Insurers require EDR because it provides comprehensive visibility and response capabilities.
In the market for an EDR solution? Check out The Straightforward Buyer's Guide to EDR.Security Awareness Training: Employees can be prime targets for attackers. Regular employee awareness training teaches them how to spot and avoid malicious content. Insurers need to know your team is equipped to protect sensitive information.
Multi-Factor Authentication (MFA): Requiring at least two forms of identification adds a critical layer of protection, making it much harder for unauthorized users to access sensitive data. It's a non-negotiable for most insurers.
Patching High/Critical Issues: The longer a vulnerability is left unpatched, the more time attackers have to exploit it. Timely patching is essential for reducing your risk.
Robust Backups: Backups protect against human error, hardware failures, and cyberattacks. You need a solid data backup policy and a regular schedule for testing those backups.
💡 In the market for an EDR solution? Check out our Ultimate Buyer's Guide to EDR.
Frequently asked questions (FAQ)
1. What doesn't cyber insurance cover?
Policies typically exclude losses from future profit projections, costs to improve internal technology systems after an incident, and reputational harm that doesn't result in a direct financial loss. Always read the fine print of your specific policy.
2. How much does cyber insurance cost?
Costs vary widely depending on your industry, revenue, the amount of sensitive data you handle, and your current security posture. A small business might pay a few thousand dollars annually, while a large enterprise could pay tens or hundreds of thousands.
3. Is cyber insurance mandatory?
While not legally required by a federal mandate, some contracts with clients or partners may require you to have it. Regardless, in today's threat landscape, it's a business necessity.
4. How do I file a claim?
If you experience an incident, you should contact your insurer immediately through their claims hotline. They will guide you through the next steps, which typically involve engaging a pre-approved incident response team to assess and contain the damage.
The bottom line
Cyber threats are on the rise, and without the right protection, your business is a sitting duck.
Implementing strong cybersecurity measures and investing in the right cyber insurance policy gives your business a fighting chance.
Stay ahead of the threats. Learn how the Huntress Managed Security Platform can help you implement strong cybersecurity measures and get your business ready for whatever comes next.
