Cybersecurity insurance: The new trend in business insurance policies

In today's technology environment, most businesses rely on data to drive their operations. Collecting and analysing data allows your company to better understand the market and uncover valuable insights. But as more organisations race to collect as much data as they can process, a new risk has emerged. Data security risks have affected both large and small businesses. In 2013, one of the largest retailers worldwide, Target, lost almost $300 million as a result of a data breach.

It has become essential for your business to protect its data as much as possible. But if a breach were to occur, cybersecurity insurance is a fall back plan that will help you recover from tremendous financial loss.

What is cybersecurity insurance?

Cybersecurity insurance is a type of business insurance that covers your company against data risks. The policy is designed for businesses in the 21st century that work with large amounts of data frequently. If this data becomes compromised by hackers or other malicious sources, the consequences are often extensive.

Businesses often suffer financial loss (from downtime and data loss), along with a damaged reputation from concerned customers. Even worse, sensitive customer data (such as credit card numbers, names and addresses, and family information) may end up in the hands of hackers.

Common risks that businesses face

You may be wondering why your business needs to sign up for a cybersecurity policy. First off, the risks that face your data and IT systems are numerous. From phishing attacks to ransomware, hackers are working around the clock to find weak spots in your IT systems. Some of the most common risks that your company faces include:

Malware attacks- Where malicious software is installed to paralyse your company operations. Malware is typically hidden inside email links or attached documents.

Data loss- where your company may end up losing or altering sensitive information.

Phishing- a type of malware attack that is disguised as coming from a trusted source (such as a supervisor or colleague).

What does the policy cover?

Cybersecurity insurance acts as an emergency backup plan in many different ways. First off, you can recover financial losses from sales, order fulfilment delays, and other operational downtimes. You can set the limits of your policy and determine how much you'll pay as a deductible (if you make a claim). For example, Target recovered $100 million in damages from its cybersecurity policy after paying a $10 million deductible.

Some policies also offer emergency data backup, where lost data can be recovered to get you back online as soon as possible. For more information, contact a company like Austwide Insurance Brokers