What’s the point of cybersecurity insurance?Cybersecurity insurance is crucial to the function of many organizations that rely on digital assets, but it is not widely understood. Unlike other types of insurance, cybersecurity insurance policies must be customized to each organization to be effective. This section will explore the purpose of cybersecurity insurance, common misunderstandings that surround the industry, and whether this type of insurance is right for your organization. Often purchased outside of general liability insurance, cyber insurance policies differ on a case-by-case basis. Because of this, it’s important to understand the underlying concepts before purchasing.As with other types of insurance, cybersecurity insurance is about balancing risk. In the event of a data breach, very sensitive information can be lost and lead to significant financial damages. Health records, social security numbers, and financial information are all covered by cyber insurance. If a data breach occurs, the financial burden of the breach is shouldered by the insurance company instead of the insured organization. It can cover the costs of replacing damaged systems, legal fees, the recovery of stolen data, and the recovery of stolen identities. Organizations that rely heavily on digital assets are more inclined to purchase cybersecurity insurance than those that don’t.
Because cybersecurity insurance is so new, there are often misunderstandings about what it does and does not cover. For one, it does not typically cover social engineering attacks. Most policies require some sort of active attack on an organization’s network to trigger the policy. Cyber insurance doesn’t cover government fines from non-compliance within payment systems. This is to prevent organizations from using cyber insurance to cover missed payments for credit card transactions. Lastly, cyber insurance does not typically cover claims made by third-parties for losses incurred by data breaches. Most of the money goes towards carrying out forensic investigations, crises management during a data breach, and notifying victims of the data breach.TL;DRCybersecurity insurance is relatively new and often misunderstood. These policies are designed to protect your organization from the costs incurred by cybersecurity attacks and data breaches. This section explores the costs covered by cybersecurity insurance policies as well as common misunderstandings that surround the industry.