Cyber insurance: What you need to qualify for coverage
If you’re a small-business owner with limited knowledge of technology, the concept of cyber insurance may seem complex and intimidating. However, understanding cyber insurance and its importance is essential to safeguard your business from the potentially devastating consequences of cyberthreats.
What is cyber insurance?
Cyber insurance is a specialized policy that shields businesses from crushing financial losses caused by cyberattacks and data breaches. It’s a safety net in the digital realm. Cyberattacks can target businesses of all sizes, but the impact can be particularly severe for small businesses. In fact, cybercriminals often view small businesses as easy targets due to their valuable data and limited security measures. This makes cyber insurance crucial for small companies, as it helps cover the costs associated with cyber incidents, such as data recovery, legal expenses, and business interruption.
However, cyber insurance is not a one-size-fits-all solution.
What type of companies would benefit from cyber insurance?
Different types of companies have varying needs when it comes to cyber insurance coverage. While all businesses can benefit from having some form of cyber insurance, certain industries are particularly at risk.
For example, if you’re in the business of handling sensitive customer information such as healthcare and financial data, you’re a prime target for cyberthreats and should have cyber insurance coverage.
Before businesses can acquire cyber insurance, insurance companies typically have specific minimum requirements. These requirements may vary among insurers, but they generally involve evaluating a company’s existing cybersecurity measures.
The minimum requirements to qualify for a cyber insurance policy
Insurers have specific minimum requirements that businesses must meet to qualify for a cyber insurance policy. Here are some key areas insurers may focus on:
1. Security protocols
Insurers will inquire about the company’s security protocols and procedures. This includes understanding how the company protects its digital assets, such as its networks, systems, and sensitive data. They may look for evidence of industry-standard security measures, such as the use of firewalls, secure remote access, and intrusion prevention systems. Insurers will also assess the company’s incident response plan and how it handles security breaches.
2. Data encryption practices
Insurers may require information about the company’s data encryption practices. Encryption is a crucial security measure that protects sensitive information from unauthorized access. Insurers may ask about the encryption methods used to protect data both at rest (stored on servers or devices) and in transit (being transmitted over networks). They may look for strong encryption protocols, such as 256-bit encryption, and inquire about the extent to which encryption is implemented across different types of data, including customer information, financial records, and intellectual property.
3. Employee training programs
Insurers know that employees play a vital role in maintaining a strong security posture. So, they may investigate the company’s employee training programs, specifically if these are relevant to cybersecurity awareness. These programs must include educating employees on potential cyberthreats, best practices for secure online behavior, and how to identify and report suspicious activities such as phishing emails.
Additionally, insurers may look for evidence of regular training sessions, awareness campaigns, or the use of online training platforms to ensure employees are equipped to protect sensitive data and systems.
4. Network security infrastructure
Insurers will assess the company’s network security infrastructure to understand the measures in place to protect against unauthorized access and potential cyberattacks. They may look into whether a company implements network segmentation, which involves dividing the network into separate segments to limit access and reduce the impact of a potential breach. They may also look for evidence of regular network monitoring and vulnerability assessments.
5. Other requirements
In addition to the above, insurers may have requirements specific to their policies or the industry. These could include regular patch management practices to keep software and systems up to date with the latest security patches, the use of multifactor authentication for access to critical systems, and regular data backups to ensure the ability to recover in case of a ransomware attack or data loss.
By demonstrating a strong commitment to cybersecurity, businesses can enhance their chances of obtaining comprehensive and suitable cyber insurance coverage. Want to learn if you can benefit from obtaining a cyber insurance policy? Consult NetWize’s team of IT experts today.