Cyber security and cyber insurance always go hand-in-hand. If you haven’t looked into cyber insurance, you might want to soon. Cyber insurance is quickly becoming popular among most businesses that rely on the internet as part of their daily functioning or revenue. Though cyber security and cyber insurance are commonly used interchangeably, they aren’t quite the same. This article will look at the difference between cyber security and cyber liability.
Cyber security and cyber liability insurance are two parts of a whole.
The first part is cyber security and the second is cyber liability insurance.
When you think of cyber security, think of the plans you have in place to protect your business. Does your business use firewalls and secured servers online? Does your business routinely check for malware or other potential cyber threats? Cyber security is the steps you take to secure your business without instruction from an insurance company. These are the daily steps you take to keep your business, employees, customers, and vendors safe.
Cyber insurance is a type of insurance policy that covers cyber-related loss events. If your business is hit with a ransomware attack where the hacker demands money in return for all of your files, a cyber insurance policy will help recover those losses. On top of covering cyber events, your insurer will also help with cyber security. An excellent cyber insurer will keep you up-to-date on recent or growing cyber events and can help you put practices into place to keep your business safe.
How much do cyber security and cyber insurance cost?
The cost of cyber security is determined by your company. How much are you willing to put towards cyber attack prevention? These costs may include firewalls, VPNs, password protectors, etc. Cyber insurance is calculated on a risk-based approach by your cyber insurance underwriter. Every company is different and will have a different cyber insurance premium rate. However, typically you may find that for a small-medium-sized business with good cyber security protocols, your cyber insurance premium is around $1,000-$1,500 per year.
How are premiums for cyber insurance calculated compared to traditional insurance?
Traditional insurance companies will calculate your premium based on fixed factors and more of a loss-based approach. Cyber insurance companies will calculate your premium based on a risk-based approach.
What is a risk-based approach to insurance underwriting?
A risk-based approach means that your underwriter will determine how much of a risk your company is based on the industry, current cyber security protections, and other factors. Simply, a risk-based approach means your premium results from your specific company’s risk combined with industry factors and evidence.
In today’s world, it’s difficult to compete without the use of modern technology. We use the internet for everything from shopping to communicating with clients and vendors. It is a mainstay for businesses of all sizes. However, with every technological advancement comes a new threat. Cyber security is critical to keeping your business safe from attacks as advanced and varied as ransomware, phishing scams, DDOS attacks, and more. Cyber security is the first step in allowing you to focus on making your business successful through internet use. However, if you want to protect yourself from lawsuits and legal action in regards to a cyber attack on your business, you should invest in cyber insurance.