In 2024, cyber threats are no longer just a concern for large corporations. Small and medium-sized businesses are increasingly targeted, with the average data breach now costing over $4 million. Cyber insurance offers vital protection, covering the financial fallout from cyber-attacks and helping businesses recover quickly.
What Is Cyber Insurance?
Cyber insurance covers costs related to incidents like data breaches or ransomware attacks, including:
- Notification costs for customers
- Data recovery and IT support
- Legal fees and regulatory fines
- Business interruption and lost income
- Reputation management
- Credit monitoring for affected customers
- Ransom payments (depending on the policy)
Cyber insurance is split into first-party coverage (for your company's direct losses) and third-party coverage (for claims made by customers, vendors, or partners).
Do You Need Cyber Insurance?
Though not legally required, cyber insurance is crucial for small businesses facing rising cyber risks, such as phishing scams, ransomware, and regulatory fines. While good cybersecurity practices are essential, insurance provides a financial safety net if those measures fail.
Requirements for Cyber Insurance
Insurers want to see that your business is taking cybersecurity seriously. Key requirements include:
- Basic Security Measures: Firewalls, antivirus software, and multifactor authentication (MFA).
- Employee Training: Proof of cybersecurity training to minimize human error.
- Incident Response Plan: A prepared, documented plan for handling breaches and restoring operations.
- Routine Security Audits: Regular assessments to identify and fix vulnerabilities.
- Identity Access Management (IAM): Tools to control and monitor access to sensitive data.
- Documented Cybersecurity Policies: Clear guidelines on data protection, password management, and access control.
Meeting these requirements will help ensure you qualify for coverage that protects your business.
Conclusion
Cyber insurance is an essential tool for managing the financial risks of cyber threats. Preparing your business with the right security measures can make securing coverage easier. For help assessing your cybersecurity, contact us for a free risk assessment at 703-968-2600.