What is Data Breach Insurance?

If you’re a business owner, you’re probably always looking for ways to minimize risk. One way to do this is to safeguard your business with data breach insurance.

Based on current predictions, the size of the global cyber insurance market is predicted to grow rapidly over the next five years, growing from around $8 billion in 2020 to just over $20 billion by 2025.

In light of these statistics, it is clear that data breach insurance is becoming increasingly important. But what is it exactly?

In this article, we’ll explore what data breach insurance is and how it can help protect your business against financial losses caused by a cyber-attack. 

What Does Data Breach Insurance Cover? 

Essentially, data breach insurance is a business insurance policy that covers costs accrued when a data breach occurs. It helps organizations limit the financial losses associated with data breaches and can help them prepare for it.

If your business gets hacked, a device containing sensitive information is breached, or a document containing personally identifiable customer information is lost, data breach insurance helps cover the cost of remedial actions.

 What does data breach insurance cover, exactly? Here are some examples.

  • Data recovery
  • Credit monitoring services
  • Customer assistance costs
  • Forensic data investigations
  • Indemnification for legal fees and expenses 
  • And more

Regardless of which type of data breach insurance you choose, having one in place gives your business peace of mind. It will ensure you are better prepared for any unexpected events related to your data security, privacy, and personal information. 

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Types of Data Breaches

Data breaches are becoming increasingly common, whether it be cyber-attacks or improper disposal of sensitive data and personal information, such as credit card data.

This happens when a hacker accesses your network or system by making use of an unauthorized program or person. Upon entering your system, the intruder can obtain business data, spread viruses, and even alter your software.

A cyber incident can be detrimental to both the bottom line as well as your company’s reputation, and are consistently regarded as a number one leading risk to businesses worldwide.

According to the most recent IBM report, the current cost of a data breach for a company averages $4.35 million.

The different types of data breach and cyber attacks include:

  • Hacking
  • Malware
  • Phishing
  • Stolen hardware
  • Cyber espionage
  • Social engineering

These cyber threats can cause a tremendous amount of damage and financial loss to both your company and in some cases, your affected customers. Although comprehensive cyber data breach insurance can be expensive, it’s an investment in the long run.

Opting out could result in much more costly outcomes due to the financial losses accrued by cybercrime.

Do I Need Insurance Against Data Breach if I Have General Liability Insurance?

Even though general liability insurance covers some data-related liabilities, what it doesn’t protect against are cyber-attacks and breach of your private customer and personal information.

That’s where data breach insurance comes in. This comprehensive coverage serves to protect your business against major financial losses in the case that a cyber-attack puts your customers’ sensitive information and other business data at risk.

In short, while having general liability insurance can be a great investment, having data breach coverage as well will give you even more peace of mind knowing that you’re covered against data security or privacy issues.

What Does Data Breach Insurance Cover

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How Much Does Cyber Data Breach Insurance Cost?

The price of the coverage will depend on what’s being covered and the limits that you choose. Usually, the average cost ranges from a few hundred dollars to several thousand dollars depending on the risk level present when determining premiums.
Before jumping in head first with a provider for insurance against data breach, make sure you do your research and understand what you’ll be getting for what cost.

What Type of Data Breach Insurance is Right For Your Business?

It is imperative that businesses invest in the right type of cyber liability insurance, one that covers all potential risks posed by a data breach, to truly protect themselves against all kinds of cyber threats.

A recent study showed that 73% of insurance claims filed by companies between 2013 and 2019 were for data breaches, incident response, and crisis management.

Not only that, but data breaches were responsible for exposing more than 37 billion personal information records in 2020 alone.

One of the most important factors in considering data breach insurance is who you partner with as your insurance provider, in addition to the following:

  1. What does data breach insurance cover according to the partner’s service level agreement (SLA)?
  2. What incidents are excluded?
  3. Within what timeframe after a breach occurs must you report it?
  4. How flexible is the provider in terms of modifying coverage to meet evolving threats?
  5. Does the cost of the data breach insurance offering fall within my budget? 
Interested in learning more about cybersecurity? Check out these blogs: Why is Cybersecurity Important? 5 Benefits of Cyber Security Training What is an Information Security Policy?

Find the Right Data Breach Insurance Policy With Attentus Technologies

Data breach insurance can be a lifesaver in the event of a data leak, but it’s important to choose the right policy and understand the pros and cons before signing up with a provider.

It’s common for businesses to put off getting data breach insurance because they believe it’s too expensive, until the worst happens and they have to spend even more money and time fixing data breaches.

Don’t get caught in that position. Talk to an expert at Attentus Technologies today for expert advice on which data breach insurance policies are best suited for your business.

For more information on how we can advise you on how to find the right cyber data breach insurance policy, contact us today to schedule a consultation.

Featured Image Credit: Pexels