Don’t Fall for These Cyber Insurance Myths
As the world increasingly moves online, so do the risks to our businesses. Cyber insurance is one way to help your business recover following a cyberattack. It covers financial losses caused by events such as data breaches, cyber theft, ransomware and the like.
Cyber insurance can be beneficial in many ways, since it typically covers the cost of:
- Recovering data
- Legal proceedings
- Notifying stakeholders about the incident
- Restoring the personal identities of those affected
However, cyber insurance is but one way to protect your business or company: in order to fully protect yourself with reputable cyber insurance, you will need an IT managed service provider for both support as well as compliance with your insurer.
Due to the complicated nature of cyber insurance, there are many myths that could be harmful to your business should you fall for them. Let’s debunk them together.
Cyber insurance myths debunked
Busting the top cyber insurance myths like the four below is necessary so that you can make informed decisions for your business:
Myth #1: All I need to protect my business from cyberthreats is a cyber insurance plan.
This could not be further from the truth. Your insurance provider will only cover your business if you meet the requirements outlined in your contract. Most reputable insurers will require proof that you have been following the proactive measures outlined in your policy. If you can’t prove your compliance, your claims are unlikely to be paid.
Indeed, as Michael Phillips, Chief Claims Officer at Resilience, is quoted in Bloomberg Law News: “Too often there’s a disconnect between what companies think a policy may cover and what’s actually covered.”
One of the most common insurance requirements is that you have top-tier cybersecurity protection. Despite the availability of a variety of cybersecurity solutions in the market, keep in mind that not all of them are the same. Finding a solution that offers the best protection for your needs is absolutely crucial.
Myth #2: I don’t need cyber insurance since I have cybersecurity solutions.
Even though cybersecurity solutions boost your defenses, they don’t make you immune to cyber incidents. True, cybersecurity solutions can reduce the risk of a cyberattack by identifying and protecting vulnerable points in your system. However, no solution can provide complete protection against all threats because emerging risks are always coming to fruition around the clock.
The U.S. Federal Trade Commission states that “[c]yber insurance is one option that can help protect your business against losses resulting from a cyber attack. If you’re thinking about cyber insurance, discuss with your insurance agent what policy would best fit your company’s needs.” Cyber insurance, then, while important, is but one defense in the arsenal of cybersecurity solutions. Still, it is an important weapon of defense to protect your company.
Moreover, human error can always result in vulnerabilities in a system, regardless of how secure it is: employees may miscalculate an email or a link, which turns out to be some form of malware; bad actors can infiltrate the ranks; organizations or managed service providers may fail. That’s why it’s good practice to have a cyber insurance policy in place to support you and your business in case of an incident.
Myth #3: Cyber insurance is easy to get.
As technology advances, so do the occurrences of cyber incidents. With small and medium-sized businesses being the most susceptible targets of cybercriminals due to a lack of enterprise-level protection, the likelihood of an attack is high. Consequently, insurers are reluctant to provide coverage since the risks are significant. While policies are still available, they are becoming more expensive and difficult to obtain, due in many ways to the uncertainty of how to cover cyber incidents.
Insurers have years of experience covering incidents as natural disasters based upon historical probabilities, but with cyber incidents, insurers are not as confident of the probabilistic relations or outcomes, since there is a relatively short history with providing insurance for such incidents. Insurers must provide insurance for the critical infrastructure of an organization, but just what exactly makes up that critical infrastructure is not as clear today as has been in the past with physical locations and entities: now, we have, as Nick Beecroft of the Lawfare Blog states, “a profusion of nodes and pathways through which systemic disruption could be amplified and transmitted.”
Hence, insurers are reticent to heedlessly provide coverage.
Myth #4: If I have a cyber insurance policy, my claims will be covered in case there’s an incident.
If you can’t prove that you’ve complied with your cyber insurance policy’s prerequisites, your claim is likely to be rejected. This is why you might want to consider partnering with an IT service provider. An expert IT service provider can help you remain compliant with your cyber insurance policy as well as provide evidence of such compliance by providing monitoring and proactive maintenance around the clock.
It’s important not to fall for the myths above about cyber insurance so that your business qualifies to be able to invest in a policy and receive coverage. However, it’s also important to remember that cyber insurance is something that demands a lot more time and effort than you might have. For further reading, check out the Carnegie Endowment for International Peace’s paper on cyber insurance by Jon Bateman.
To protect your business effectively, you should partner with an IT service provider like Total Secure Technology, which can help you understand how to increase your chances of receiving coverage and a payout in the event of an incident. Reach out to schedule a no-obligation consultation.