Cyber insurance for businesses
What cyber insurance covers after a data breach, an extortion attempt or an outage, what help is included and which companies need it most.
Cyber insurance helps your company when it is hit by a data breach or an IT attack. Depending on the policy, it can provide access to specialists and cover costs such as restoring systems, business interruption and certain claims from affected parties.
Why consider cyber insurance?
Most companies depend on their systems: email, customer records, accounting software and online shops. When those stop working because someone has broken in, encrypted the files or tricked staff into handing over passwords, the whole business often grinds to a halt.
Ordinary business insurance is built for physical damage such as fire and burglary. Digital incidents may fall outside standard property and liability cover. That is why cyber insurance exists, usually bought as an add-on or as a separate policy.
What cyber insurance usually covers
The scope varies between policies. These are the most common parts.
Incident response
Access to IT experts, lawyers and communications support as soon as something happens. This is often the most important part.
Recovery
The cost of restoring data and systems and getting the business back up and running.
Business interruption
Financial losses caused by an insured IT outage.
Claims from others
If customers or others claim compensation after their data has leaked. Which claims are covered is set out in the policy terms.
Example: The Monday everything stopped working. An accounting firm with eight employees discovers one Monday morning that all its files are encrypted and someone is demanding payment to unlock them. The firm calls the insurer's incident line. Experts contain the attack, restore from backups and help the firm inform its clients. The policy may cover the response costs and losses from the disruption, subject to its terms.
Who might need cyber insurance?
Any company that would stop if its computers stopped working benefits from it. That applies especially to:
- companies that handle customers' personal data or payments,
- e-commerce and companies that sell online,
- IT consultants and others with access to their clients' systems, such as accounting firms and advertising and communications agencies.
Small businesses can be targets too. Many attacks are automated and look for weak passwords and unpatched systems, regardless of company size.
Good to know. Insurance does not replace prevention. Backups, two-factor authentication and up-to-date systems reduce both the risk and the damage, and they can affect your policy terms.
Frequently asked questions
Is cyber insurance included in business insurance?
Usually not. Some business insurance policies have limited cover for data breaches, for example, but full cyber insurance is normally an add-on or a separate policy.
Does cyber insurance cover email fraud?
It depends on the policy terms. Fraud where someone tricks the company into paying the wrong account can fall under cyber insurance or under crime insurance. Check which of the two you have.
