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Why You Should Consider Buying A Cyber Insurance To Protect Your Business Against Cyber-Attacks

by Anna Campos

The threat posed by cybercrimes cannot be emphasized any further. According to a report by Symantec, a technology company, cybercrimes are on the rise. In 2014, cybercrime and cyber-attacks against large companies rose by a staggering 40% globally. And the news is not good for small firms either. A survey by Ponemon Institute hints that small firms are more vulnerable to cyber-attacks because they lack robust defense systems.

So what can you do prevent your company from losing money due to cybercrime? Well, there are lots of things that you must be considering, but one clever move you can make is to purchase a cyber insurance policy.

What Is Cyber Insurance?

It is a type of business insurance that is designed to cover a firm's losses from different cyber incidents, including network damage, business interruption, and data breaches. There are two types of cyber insurance you can purchase:

  • First-Party Risks - They cover for damage to the policyholder's own data and lost income due cyber-attack or data breach.
  • Third Party Risks - They cover policyholder's liabilities to clients, or to different regulatory and governmental entities.

What Are The Scenarios In Which A Cyber Insurance Can Cover You?

Areas in which a cyber insurance can cover you include (but not limited to) the following:

  • Security Breach Due to Network Failure. Failure to your network system leaves your computers vulnerable to virus transmission, loss of data, and cyber extortion. You are also covered by cyber insurance if network failure grants the culprits of a cyber-attack access to information regarding trade secrets, or patent information you may be holding for a client.
  • Errors and Omissions. A cyber insurance policy covers claims that are brought about by errors that manifest in the performance of your services.
  • Security Breach Due to Human Errors

For your security defense to breached, the reason may not necessarily be a network failure. The breach could be as a result of human errors, such as sending of a file that contains vital information to the wrong email address, or loss of a laptop. It might also be a breach of physical records, such as files tossed in a dumpster.

But there are also cyber-related sectors that a cyber insurance cannot cover. Good examples are reputational harm and costs to improve your technology systems.

Cyber-attacks are real and incur huge losses to firms. Operating without a proper defense system and a cyber-insurance in place is like leaving the doors of your house open for robbers to enter.