Cyber Insurance Coverage Checklist

According to IBM, the average cost of a data breach was $4.2 million dollars in 2021. This is not simply the cost of mitigating exposed sensitive information but also the fallout from news about the exposure. While cyber attacks are part of the online landscape, there are multiple steps to take for increased protection.

A cyber insurance coverage checklist is more important than ever, especially as the cost of security will surely continue to increase, especially as ongoing support costs increase. Even if cyber security measures are already in place, cyber liability still impacts small businesses and all businesses continuing to do business online.

Indeed, it is critical to protect all forms of personal information stored within a company, and have cyber liability insurance to protect the organizatcyber securityion as a whole.

What Cyber Insurance Coverage Entails

It is important to understand what cyber insurance coverage entails. The key elements of this insurance are essential to small business protection and include forensic expenses for all computer systems, legal expenses for defense against cyber liability claims, notification expenses, regulatory fines and penalties, credit monitoring and ID theft repair, and public relations expenses.


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Understanding the Difference Between Cyber Liability vs. a Data Breach

There are strong differences between cyber liability and data breach insurance. Companies researching the best policies should understand the differences. What is cyber liability, exactly? This term comes into play when a company is accused directly by an outside party for alleged damage from a cyber incident.

Even if the company did not directly participate in the exposure, they can still be held liable for damages. This is what cyber insurance coverage is designed to protect against.

How Liability Coverage Reduces Cyber Risk

Even when network security is high, that does not mean that cybercriminals will not target businesses of every size. However, liability coverage reduces cyber risk by adding another layer of protection around the business at large.

Exploring the Cyber Insurance Coverage Checklist

Preparing to purchase cyber insurance coverage requires examining business needs, budgets, and specific coverage types. Like anything else, this form of property insurance coverage depends on the specifics of the organization.


cyber insurance coverage checklist

Credit: Pickawood

Determine Risk by Business Type

The nature of the organization strongly determines how much cyber insurance coverage is required. For example, an online retailer that processes credit card payments has a high amount of extremely vulnerable information present.

On the other hand, a company that keeps most of its information in hardcopy form will have a lower risk level than the online retailer.

Other vulnerable industries include any organization that works with personal health information (PHI). Healthcare and healthcare-adjacent companies have a higher degree of scrutiny on their practices when health and medical information can fall into the hands of unsavory outside sources.

Covering Cyber Liability Specifics

Not every company has the same cyber liability, which means that the cost of insurance coverage will vary dramatically. Looking at policies that cover the type of attacks the company would experience based on the industry is extremely important. 

For example, does the policy cover mistakes made by vendors on the company’s behalf? Will the liability coverage extend to suppliers that are not official subsidiaries of the organization?


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Comparing Costs Between Policies

The world of insurance varies from carrier to carrier, and each carrier has its own policies, exclusions, and underwriting. While risk management practices do have universal principles on the whole, the insurance component does not. 

This means that the quote that one insurance company charges may vary dramatically from another insurer. 

Reducing costs, of course, relies on tightly constraining requirements and being realistic about the protection required. In addition, demonstrating a strong security policy in place goes a long way to lower the cost of additional coverages. 

Routine IT consulting goes a long way in staying proactive against vulnerabilities. In fact, documenting security policies can play a role in general liability insurance as well.

Is there a limit to insurance cost?

The regulatory fines for a data breach or cyber liability issue can be quite high, especially if credit card numbers become part of the exposure. For example, penalties for PCI DSS are up to $500,000 per incident when merchants are not PCI compliant.

In addition, noncompliance means closing down payment processing until the problems are resolved in full and resolution steps clearly documented. 

The insurance cost for cyber insurance coverage pales in comparison to the penalties, fines, and reputational damage companies face after security breaches.

Given the high cost of the consequences, it is wise for businesses of all sizes to do everything that they can to lower their security risks at all times and to routinely review security policies.

Overlooked Considerations of This Aspect of Business Insurance

There are a few points that often become overlooked when it comes to this type of business insurance. Those considerations are featured below:

  1. Retroactive coverage. Consider the reality that security breaches take a while to discover, especially if cybercriminals use undisclosed vulnerabilities to obtain sensitive information. Set the coverage date before the date the policy is signed.
  2. Double check exclusions. No insurance policy will cover every single scenario, but broad exclusions often leave businesses less protected than they anticipated.
  3. Ensure that the coverage allows for independent legal counsel.  Not all cyber insurance policies require using their company’s legal counsel, but ensure that this requirement is not in place before signing anything official.

Issues such as bodily injuries and physical breaches are covered under general liability insurance, but double-check your existing insurance coverages to see what is covered specifically by the company’s policies.

Protect Your Business in an Uncertain World

No company wants to find itself as the latest headline in a long wave of security breaches. The time is now to look closely at the cyber insurance coverage checklist, and then look into cyber liability policies that genuinely protect your business.

Outsource Solutions Group’s cyber security services are designed to not only defend against common cyber attacks and cyber extortion, but these services also lower the insurance cost involved with adding this policy to the company’s insurance stack as a whole.

Having general liability insurance is not enough. Every business needs specialized property insurance that covers the ongoing nature of doing business online.

Outsource Solutions Group recommends its clients acquire cyber liability insurance while using our services. With the pace at which new threats arise, it is virtually impossible to guarantee perfect security.

For the complete IT and cybersecurity package, trust Outsource Solutions Group. Contact us today for a free consultation.

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