What Is Cyber Insurance? Everything You Need To Know

Businesses craft cyber insurance, also known as cyber risk insurance or cybersecurity insurance, as a protective financial tool.

Its purpose is to assist companies in safeguarding themselves against the severe consequences that may arise from cybercrimes, including but not limited to malware, ransomware, distributed denial-of-service (DDoS) attacks, or any other tactics employed to jeopardize a network and sensitive data.

These insurance products tailor to address and mitigate the specific risks that a company faces in the realm of cybersecurity.

What Is Cyber Insurance?
Image source (Piktochart)

Do I need cyber insurance?

Chances are, you do. As organizations expand their usage of applications, devices, and other technologies, their susceptibility to attacks also grows.

Similar to how businesses secure insurance for operational challenges, natural disasters, and physical threats, there’s a crucial need for insurance coverage against cyber risks.

In the event of a significant breach, your company might lack immediate resources to address the issues or recover losses.

Cybersecurity insurance serves as a safeguard, ensuring that such attacks don’t incapacitate your business by providing necessary support.

What does cyber insurance cover?

What is cyber insurance
Cybersecurity protects businesses from the impacts of cybercrime, including malware, ransomware, DDoS attacks, or any other method compromising network and data: Photo source (Cisco)

The majority of cybersecurity insurance policies encompass a wide spectrum of potential losses stemming from unforeseen cyberattacks.

Moreover, certain plans extend coverage to include physical damage to hardware or protection against losses in business income.

These insurance plans are adaptable and can be customized based on the existing security posture of your business.

Read more: What is business income insurance?

Can I replace cybersecurity defense with cyber insurance?

Certainly not. A comprehensive cyber risk management strategy should consider cybersecurity insurance as a valuable tool for mitigating the fallout from a breach.

It should be seen as a component working in conjunction with cybersecurity technology.

Providers of cybersecurity insurance assess the robustness of a company’s cybersecurity measures before issuing any policy.

A robust security posture not only facilitates better coverage but, in certain instances, can also unlock access to additional enhancement coverages.

On the contrary, a disjointed approach to enterprise security can pose challenges for insurers to comprehensively evaluate an organization’s security stance, potentially leading to inadequacies or misaligned insurance purchases by the insured companies.

For businesses lacking appropriate investments in cybersecurity solutions, qualifying for insurance may be challenging or result in limited and costly coverage.

Duo Cyber Insurance Guide

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