Data breaches are all over the news at the moment, especially with Target’s sad Q4 profits. On the rise right behind data breaches, almost like ambulance chasers, are cyber insurance companies offering coverage for those associated costs. But who needs the coverage, and who needs the coverage most and isn’t getting it?
It’s absolutely a fact that businesses should have some sort of cyber-security coverage as the average cost to repair a data breach is around $600,000 and can be more if the company is in IT or an industry that deals with financials. Basic business cyber-insurance covers the cost of finding and repairing the breach, the cost of fixing any damaged equipment (software or hardware), and the cost of informing consumers or potential people who may be at risk from the breach.
What most basic business cyber-insurance does not cover is special circumstances like if a customer were to seek recompense for his/her lost information or the cost of the systems transmitting the virus or malware to another system or network.
The fact of the matter is cyber-insurance is a relatively new concept, and with data breaches costing businesses millions of dollars everyday, it certainly has the attention of CEOs from small firms to large conglomerates. Unfortunately, the coverage that is needed in this day and age of technology is usually not an all-inclusive package. Insurance companies are taking advantage of the fact that businesses are racing to get coverage, and they are making all the rules to the detriment of the businesses involved.
Some companies separating out the coverages into separate plans to take advantage of the businesses needing protection when they could easily combine the lot to create an overall easy package. Businesses should fully vet an insurance company before joining as there are many “insurance companies” newly created in order to scam or steal money.
The Cost of Cyber Insurance
The average cost for cyber-liability insurance is around $10,000 to $35,000 for $1 million in coverage. The average policyholder acquires about $5 million in coverage. There are exceptions and variations depending on the field of the company and location. A good insurance provider can figure out the best amount of coverage for each business.
There is a lot of talk and speculation regarding whether or not some sort of mandatory laws calling for cyber-protection should be implemented, and businesses are now trying to backtrack on coverage in case their company is next. Cyber-insurance is certainly more pricy than many other types of insurance as it’s mainly targeted toward businesses, but what about the average consumer? Do they need cyber-insurance?
There are a few protections given to the average consumer by banks and credit card companies. These run along the lines of stolen cards and fraud protection. With these in place, many individuals have no need for a specific cyber-insurance policy. There are also government cyber-specific organizations that are working to protect consumers and their money. However, that doesn’t mean everything you have is safe. People still need to be cautious with their login credentials and personal information.
The bottom line is if you are an average citizen just wanting to protect your money you should be safe, unless you are investing in Bitcoin, in which case you’re SOL. If you are small-business, big-business, or multinational corporation you need to protect yourself with cyber-insurance in addition to the everyday fail-safes that should already be in place like firewalls, encrypted hard drives, and other solutions.