With the rate and associated costs of data breaches and ransomware attacks steadily rising, organizations that rely on technology or collect, process, or store sensitive data should consider cyberinsurance. Even organizations with the most advanced security systems and stringent security processes are still susceptible to cybersecurity incidents. Regardless of how big or small your organization may be, a security breach can be costly. According to the National Cyber Security Alliance, almost 50 percent of small businesses have experienced a cyberattack, more than 70 percent of cybercriminals target small businesses, and up to 60 percent of small and medium-sized businesses go out of business within six months of being hacked.
Most standard business insurance policies don’t cover one of your most critical business assets, your data. Data breach insurance helps small to mid-sized organizations respond to a breach if their sensitive data is lost, stolen, or held hostage. It can help mitigate the direct costs of an incident such as regulatory fines, legal fees, and the costs for recovering lost data, and may cover some indirect costs such as forensic investigation, lost income, damaged reputation, and missed opportunities. Generally more affordable than full liability cyberinsurance policies designed for large enterprises, data breach insurance provides cost-effective coverage for smaller organizations.
Several factors determine the costs and benefits of breach insurance, including the organization’s size, the industry it serves, and the amount of sensitive data it collects and stores. Most providers offer flexible coverage plans tailored to the organization’s specific needs with affordable options for helping organizations manage risk responsibly. Much like car insurance companies that reward safe drivers with discounts, most cyberinsurance providers will lower your data beach premiums for improving your organization’s security posture. And just like bad drivers that get dropped for excessive tickets, your cyber insurance provider may drop you or refuse to renew your policy if your security program is not up to accepted industry standards and compliant with cybersecurity regulations. Many cyberinsurance carriers require organizations to adopt specific preventative measures as a requirement for buying or renewing cybersecurity insurance coverage. Additionally, many providers will lower premiums based on the level of your cybersecurity controls and the best practices you implement for reducing your IT security risk footprint and staying compliant with regulations. For example, cyberinsurance carriers require organizations to implement strong passwords with Multi-Factor Authentication (MFA) and advanced backup and restore solutions before purchasing or renewing a data breach policy.
If your small or mid-sized organization collects or stores personally identifiable information on customers, employees, or vendors digitally, there’s the risk your organization will be beached and face significant liability. If your organization is in an industry such as healthcare, education, or government that is subject to data handling regulations, you are susceptible to substantial fines. Unless you are in a position to cover the potential costs of an incident, data breach insurance is a sensible means of keeping your organization protected.