Cyber Insurance – What Is It and Why Should You Purchase It?

Cyber Insurance | Journey Financial Group

We don’t get asked these questions often enough from our small business clients which tells us that there may be some confusion as to what Cyber Insurance is and how it will protect their business. You may have heard about it but perhaps you don’t think it’s needed or it’s too expensive.  As with all insurance products, Cyber Insurance was created because of a need.  The need is real and every business owner should have it as a part of their Cyber Security strategy.

Cyber Insurance is looked at like Earthquake or Flood Insurance, is it really necessary since the likelihood of an “occurrence” may or may not happen?

We are here to tell you, it can and will happen. In fact, it happened to one of our client’s. Here is their story:

“I previously worked for a small company with about 10 employees. One day, we logged into our computer and discovered we had been hacked.  They (the hackers) had inserted a virus onto an email and thus spread throughout each computer.  What transpired as a result of this attack was the company’s inability to conduct business for 5 business days.   We had frustrated clients and employees, not to mention the long hours of recovering our data and the lost revenue.  At the time, the company did not have Cyber Insurance however, immediately after this incident the company purchased it and will never again be left without it.

The company was fortunate in the fact that it was able to recover most of the data and did not have to pay a ransom.  While there was some loss of data, it was not catastrophic.  Even despite all of the backups the company had in place, there was still data lost and it could not be recovered.”   

So how would having Cyber Insurance have helped in this situation?  The insurance policy would have provided the company with funds to pay a ransom (if necessary), investigate the source, provide lost revenue and wages, and the ability to send notifications to customers.

We cannot stress this enough, every small business should have Cyber Insurance.  Investing in this type of insurance is crucial if you store data online. Let’s face it, most of us do.  It’s important to recognize that insurance will not prevent a data breach from occurring, but it can assist with the aftermath. To protect your business, we recommend incorporating cyber insurance into an overall security strategy that includes security safeguards and a significant response plan.

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