Cyber Insurance 101: Left of Boom

Cyber insurance provides critical financial protection for your business in the event of a cyber incident, helping to mitigate risks associated with cyber threats. For small businesses, it’s particularly important as it covers various costs such as forensic investigations, notification costs, credit monitoring, legal fees, and liabilities if a customer or third party sues. However, with the increase in cyber-attacks, cyber insurance has become more expensive and harder to obtain, requiring businesses to demonstrate a solid cyber preparedness strategy.

While cyber insurance offers financial support and resources like breach coaches, it doesn’t prevent incidents or protect your business from downtime or reputation loss. Understanding your policy is essential, as regular business insurance doesn’t cover cyber incidents, and there may be exclusions such as “foreign acts of war.”

Insurance providers often ask detailed questions about your cybersecurity practices. For instance, they may inquire whether you use Endpoint Detection and Response (EDR) with central monitoring and enforce application whitelisting on all devices. Answering these questions accurately is crucial, as incorrect or incomplete responses can lead to policy denial or higher premiums. Additionally, it's essential to keep track of sub-limits in your policy and adjust coverage as your business grows.

Here are three key takeaways:

1. Accuracy Matters: Always provide precise and honest responses to insurance questionnaires. Inaccurate answers can result in higher premiums or claims being denied.

2. Underwriters Are Not Technical: Be clear and detailed when explaining your cybersecurity measures. Provide additional explanations or addendums if necessary to help underwriters understand your security infrastructure.

3. Bundled Cyber Policies: While bundling cyber insurance with general business insurance may save you money upfront, a stand-alone cyber policy may provide better long-term coverage. However, if you experience a cyber incident, this may impact the renewal of your business policy, and your premiums could increase.

Cyber insurance is a valuable safety net, but it’s not a substitute for robust cybersecurity measures. Ensure your business is well-prepared with both prevention strategies and the right insurance coverage.