3 Ways Cyber Insurance Covers Financial Loss

If your business is a target of cybercrime, you’ll have a lot to deal with. The aftermath of even a small cyber breach can result in significant loss of time and money.  Your finances will certainly take a hit, often in multiple ways.  This could affect your turnover, profits and cash reserves. It could even threaten the future of your company.

If you cover yourself against incidences of cybercrime and their effects, you reduce potential financial loss. These kinds of policies protect your money in various ways, so what kind of financial support might you receive?

1. Cover your losses

Any cyberattack has a financial impact. If it affects the running of your business, then you're likely to lose money.

For example, if you sell items purely online and your network is taken down in a ransomware or denial of service attack, you cannot operate at all. You can't take orders or fulfil existing ones if you don't have a working website and system.

Losses don't just have to affect your turnover. If you have a significant problem that affects your customers, you may need to bring in PR mitigation specialists to help you restore your reputation.

If you have cyber insurance, you’ll receive help with these expenses. For example, your policy may cover you for the costs of business interruption if your business can't operate for a while. It may also pay for the professional crisis management help you need to put right any reputational damage.

2. Cover your recovery costs

A cyberattack doesn't just affect operating costs. You may also have to cover the costs of identifying the problem and fixing it. Even a minor cyberattack could damage your website, network or systems.

For example, if your company is hit by a cyber extortion attack, you may decide to pay the criminals to restore your system as soon as you can.  Alternatively, you may need to bring in forensic specialists to track down and eradicate a virus and to find out how it got into your system in the first place.

Once you know where you stand, you'll have to clean up your systems and repair any damage. You may need to pay to recover lost or corrupted data.  Following this, you'll need to put processes and procedures in place to prevent future attacks.  All of these jobs cost money.

A cyber insurance policy may help pay for these recovery costs.  You can focus on putting things right without having to worry about how much this will cost you.

3. Cover your liability to third parties

A cyberattack doesn't just affect you and your business.  It may also affect your contacts and customers, adding to your possible costs.

If someone is badly affected by a loss of personal data, they may take legal action. If you made a mistake and didn't protect personal data against an attack, then you may have to pay regulatory damages, fines or penalties.

Plus, if someone accesses your contact database, you’ll have to deal with the costs of notifying affected parties; every business will have some form of statutory reporting responsibilities. If your contacts need ongoing credit monitoring after a data breach, then you may have to pay these costs as well.

Many cyber insurance policies give you some level of third-party liability protection. A good policy covers you for both the smaller costs, such as notification expenses, through to larger expenditure such as litigation payments.

Bear in mind that not all cyber insurance policies come with the same features and payment limits. It's important to ensure that you take out the right amount of tailored cover for your business. To find out more, and to get advice on your options,  contact Westralian Insurance .