What Are The Advantages And Limitations Of Cyber Security Insurance?

With the number of cyber-attacks on the rise, almost every business even with a small digital footprint should buy cyber risk insurance.

But before you actually rush to buy it, it’s important to have a fair idea about this policy. Because while it has many benefits, it has its own set of limitations just like any other business insurance like D&O insurance.

Business Insurance · What Are The Advantages And Limitations Of Cyber Security Insurance?

Talking about the advantages, cyber risk insurance provides wide coverage for both first and third-party losses.

If you have been cyber-attacked, the insurance will cover directs costs resulting from business interruption, extortion, theft, regulatory fines, data loss, and crisis management. To that, it will also cover third-party liabilities, like breach notification costs, data privacy and litigation costs, privacy liability coverage, and media liability coverage. For instance, if one of your customers whose data has been compromised decides to sue you, your cyber risk insurance will cover legal fees and other expenses related to your defence against that lawsuit.

But the insurance has several exclusions, like intentional or deliberate acts, loss of tangible property, bodily injury or property damage claims, any guarantee or warranty accepted by the company. Depending on the insurance carrier, there could be more exclusions.

So, before you buy cyber risks insurance, be aware of its limitations; be aware of the scope of your insurance plan. Do just as much research as you would do when buying other business insurance, like directors liability policy.

With a better understanding of the insurance – as well as a better understanding of your own needs and risk exposures – you will be able to choose the right plan that provides you with maximum coverage. Consult an insurance broker for help instead of taking the DIY route. They can help you understand the terms and conditions of cyber security insurance better; they can help compare different plans and then assist you in picking the right one that checks all the right boxes for you. So, get in touch with an insurance broker today.

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