Hi, this is Jeremy from Ochsner Insurance, and welcome to Cyber Monday! Every Monday, we provide updates on cyber insurance and cybersecurity to keep you informed and protected.
What is Cyber Insurance?
Cyber liability insurance offers crucial protection for both first and third-party damages when personal and financial information is compromised due to data breaches or network intrusions. This coverage also extends to funds extorted through malware attacks.
- First-party coverage: Protects your business.
- Third-party coverage: Protects those affected by the breach.
You can add cyber coverage to your business owner’s policy (BOP) (not recommended) or opt for a standalone broad-form cyber policy for more comprehensive protection.
Importance of Strong IT Infrastructure
To effectively protect your business, it’s essential to have a robust IT infrastructure. This includes:
- Prevention Systems: Keeping the threats out of your business.
- Detection Systems: Identifying and mitigating threats in real-time.
- Consultation: Working with your IT department or a managed services provider to ensure your cybersecurity measures are up to date and tailored to your business needs, whether you’re in manufacturing, services, medical, or warehousing.
Understanding Policy Limits
Many business owners rely on BOP add-ons for cyber coverage, but these often provide limited protection and can create a false sense of security. Typical add-ons might only cover data breaches and exclude crucial areas such as:
- Forensic Investigations: To determine the extent of the breach. Many times the most expensive portion of the cyber insurance claim!
- Notification and Credit Monitoring: For those affected by the breach. Can be vendors and/or your clients and customers!
- Malware and Ransomware: Many policies have small sub-limits or no coverage for ransomware, leaving your business vulnerable to high extortion demands.
Real-world Examples and Recommendations
Consider the case of a medical provider that faced a $30 million ransomware demand in Bitcoin. Few businesses have such large sums readily available, highlighting the need for policies that offer direct payment instead of reimbursement.
- Broad-Form Cyber Policies: These provide the most comprehensive coverage, including high limits for both first and third-party damages.
- Adequate Limits: Ensure your policy limits are sufficient for your business size. For businesses with $5 to $10 million in sales, a $1 million policy limit may be inadequate, especially when average claims for larger businesses can reach up to $4 million.
Final Thoughts
Cyber insurance is a critical component of your business’s risk management strategy. Always:
- Consult with Your IT and MSP: To implement strong cybersecurity measures.
- Review Your Policies: To ensure they provide broad-form coverage and adequate limits.
If you have any questions or need assistance, feel free to contact us at Ochsner Insurance. We’re here to help and ensure your business is well-protected.
Thank you for ready the content, and here’s to your success!