Is Data Breach or Cyber Security Insurance Right for You?

If your organization or business stores private information of any type, insurance should be considered. Whether or not to purchase a policy is a matter of deep consideration depending on a range of factors. While there are more than a few items to consider, here are three to start:

• Location(s): If your company is located in or does business in the E.U., you’ve undoubtedly been affected by GDPR. In the U.S., there are a number of legalities when it comes to data breaches (both on the federal and state levels). These laws and regulations result in policies across the globe that differ from nation to nation.
• Data Collected: A website that collects email addresses is going to have different needs than a subcontractor who takes on extensive data from other companies. The amount of data you collect, the amount of time you keep it, and the extent to which you use collected data are all factors in the decision to purchase data breach insurance.
• Other Protections in Place: No matter how prepared a company is, breaches happen. However, if all proper precautions are taken, it could affect the cost of a policy and other factors. Having stringent cyber security measures in place is always preferred, and it could mean fewer issues in the event of a breach. Easier identification and future prevention can alleviate the need for certain coverages.

What to Look for in a Data Breach or Cybersecurity Insurance Policy

If you’ve determined that a data breach or cyber policy is necessary for your organization, there are other considerations to weigh before choosing an insurance provider. While there are often many “small print” details, it’s important to take your time. Here are three important factors to look for when choosing a policy.

Do You Need More Than Financial Coverage?

The insurance industry exists largely to cover the financial risk of those insured. However, there are other problems that come with a data breach. It takes time and effort to perform all of the legal duties that come along with data loss.

Part of the “to-do” list of a company when a data breach occurs includes:

• Reporting to the governments
• Notifying individuals affected
• Finding the vulnerability
• Updating your cyber security

Cyber security insurance can (but doesn’t always) offer assistance for these liabilities.

Pay Special Attention to Wording

What you would like to see in your policy needs to be clearly expressed in writing. Not only the types of coverage, but the types of incidents that are covered should be clearly worded. There is no shortage of hostilities online, and a clear policy will help you if you will need to use it. As a simple example, if your policy doesn’t mention “hacking” and data loss comes via a hack — it could cause problems when it is time to make a claim.

Stay Up-to-Date on Policies (and Terms)

There are many pieces of cyber-related legislation that have recently become law and more in the works. Increased laws mean changes in procedures and insurance policies. Even after you choose great coverage, the landscape can change in a number of ways. Reviewing your policy, company needs, and current laws regularly are all needed. Doing so ensures that you have the right data breach insurance if an unfortunate cyber security incident should occur.

Data breaches are always on the rise, and security threats affect businesses of all sizes. With the cost of a data breach reaching unprecedented proportions, data breach or cybersecurity insurance is becoming not just a smart investment for businesses, but an essential one.