You might think that cyber insurance is just another way for companies to make money out of businesses. However, according to one of the UK’s leading lawyers, cyber security could play a vital role in data protection policies, even though only one third of companies actually have any. Here are some things you should consider about cyber insurance before you decide whether or not you should invest in it for your company.
Your main insurance is not cyber insurance
The umbrella policy you may have, or general liability and professional indemnity insurance, will probably cover you if you lose data as a result of physical damage (such as damage or theft of a device), but will not necessarily cover you from data loss as a result of being hacked, or if you’re at fault for losing a file. Cyber insurance policies, however, may cover you in such circumstances.
Not all cyber policies are the same
As with all types of insurance policy, different cyber insurance policies will cover and exclude different things. Before investing in a policy, you should be certain that it is suitable for you and your company. It’s important not to presume that all policies will be the same, some are much more comprehensive than others and you should ensure that you will be covered for a wide variety of reasons for data loss.
Assess your company’s needs first and perhaps negotiate with an insurance provider if a policy doesn’t quite do what you’d like. Also, if a policy sounds ideal, but covers more than you need, you could try to negotiate for a lower premium.
Insurance should not replace prudence
You should not become complacent and slack with your company’s data security strategy. Having cyber insurance can mean that your mind can be at ease in case of any data loss, but does not mean that you shouldn’t stop doing your utmost to keep protected in the first place. Data back-ups and strong passwords are still as important as ever. However, it does work both ways. Cyber insurance will also come with tips on how to look after your data and many providers will offer risk management strategies to their customers.
What is your financial risk?
Whilst you shouldn’t decide against cyber insurance just because of the expense, you should consider whether the cost of the insurance is comparable to the cost of losing your data. If your company’s data is of little value and would be easy to replace, you might find that your umbrella policy is enough to cover your needs. However, if your business deals with valuable data that, if lost, would have a great effect on the business, cyber insurance is definitely something that should be considered.
Ultimately, the decision as to whether or not cyber insurance is worth the cost is dependant upon each business. But the most important thing to consider before taking out a policy is that it will be right for you and your company’s needs.
[Photo Credit: Alan Cleave]