When a business experiences a ransomware attack, the company must decide whether to pay the attackers. In addition to paying for the damage caused by a ransomware attack, the company may have to deal with legal costs, forensics, and compliance fines.
Cyber insurance can help mitigate these costs by shielding businesses from the financial losses associated with a data breach, cyberattack, or another cybersecurity incident. This can help keep the company out of court and focus on recovery instead.
Coverage for Damages
Cyber insurance helps cover damages associated with data breaches and other cybersecurity incidents. This can include costs related to investigations, forensics, compliance fines, lawsuits, and extortion payments.
Often, businesses need to be made aware that their existing property and liability policies do not provide full coverage for these losses. That is why finding a policy written explicitly for cybersecurity is essential.
As data breaches and ransomware attacks increase, insurers require more detail on security best practices when underwriting new policies. This includes asking questions about backup procedures and specific security controls in place.
These requirements are an effort to mitigate risk, and some companies have been rejected for coverage because they still need to follow these standards.
A cyberattack can cause significant financial and reputational damage when a business is hit. In addition, it can also lead to legal actions from affected customers and regulatory activity.
The cost of a ransomware settlement can be very high, especially for large organizations with extensive data infrastructures and complex systems. That is why it’s essential to look for a policy that will help cover the cost of the damages that result from a ransomware attack.
Typically, cyber insurance can cover the cost of paying for encryption, restoring data, and replacing damaged computers. It can also cover the cost of a company’s lost income due to downtime and any regulatory fines that may be issued due to a data breach.
Coverage for Payments
Cyber insurance policies can help mitigate the costs of payments made to ransomware victims. This can include data recovery, system forensics, and legal fees.
Insurers are adjusting their policy limits to match the growing costs of ransomware attacks. They’ve raised premiums for a range of cyber policies from $5 million to $1 million or more over the last year, broker Risk Placement Services (RPS) said in a recent report.
The insurance industry is also collaborating with law enforcement to strengthen its lines of communication and share threat intelligence. This can ensure that ransom payments are only paid when no other options exist.
For example, a school district in Michigan recently had a ransomware attack on its computers and was forced to pay $60,000 for a decryptor to unlock its data. Its insurer covered the payment but lost money daily because the computer systems were down.
This issue will evolve as cyber and physical insurance become more similar, so it’s essential to consult an experienced cyber broker early in your search for coverage. They’ll be able to help you understand the fine print and navigate your policy details. They’ll also be able to help you make the best decision for your business.
Coverage for Legal Costs
Businesses must weigh the costs of paying the criminals against the disruption they will cause and their impact on customers, reputation, and business continuity.
Cybersecurity industry experts like Fortinet know a ransomware payment can be daunting for any organization. However, cyber insurance offers a way to mitigate these costs. It can cover the legal costs of pursuing ransomware victims and the expenses associated with forensic investigations and mediation.
Cyber insurance also covers other legal costs resulting from data breaches and cyberattacks. It can help with business interruption costs, intellectual property infringement, and technology errors and omissions (E&O).
Forensic investigation is an integral part of any cyber insurance policy, as it allows a business to determine whether an attack has occurred and what was involved. This may include hiring a security consultant or a forensics expert to review the incident.
Similarly, mediation is an integral part of any cyber insurance policy as it helps a business and its cybercriminals reach a mutually agreeable solution. This can reduce the number of disputes, reducing the amount of money the company has to pay in legal fees.
In the last few years, ransomware has become a significant concern for insurers and is a primary driver of increased premiums for this type of cover. Insurers are trying new strategies to address this growing problem, including adding additional underwriting questions and limiting the coverage they will provide for specific incidents.
Coverage for Business Interruption
Ransomware attacks are among the most common cyber threats and have risen dramatically in recent years. Cyber insurance is a must-have for businesses that store or send sensitive data.
In addition to covering damage, payments, and legal costs, cyber insurance also can mitigate the costs of business interruption due to ransomware settlements. This coverage can help you recoup lost income and cover the cost of temporary office space as your operations are disrupted.
Many businesses need help absorbing the cost of paying ransomware demands, which typically top out at five figures. While no one wants to support cyber criminals, these demands often result in operational disruptions that could last weeks or months and cost far more than the ransom paid.
A business can also lose customers and reputation if it can’t continue to operate as normal. This can have a significant impact on revenue and profit.
To help mitigate this risk, a business needs to manage user access rights from a central platform that ensures only the right people can access important information and resources. This process is called User Lifecycle Management. By implementing this procedure, companies can help their insurance company qualify them for cyber insurance.