HOW IMPORTANT IS CYBER RISK INSURANCE AND HOW DOES IT WORK?

Sadly, as we continue to develop and reach farther in our technology, security is still the main issue of it especially in the information technology industry where data breaches and other forms of cyber crimes are becoming very rampant with lots of businesses losing the huge amount of money due to it.

In the past couple of years, cyber crimes like data breaches have resulted to legal fees as well as major fines and the hassle it brings to businesses especially startups and Small, Medium Enterprises (SME’s) which are the primary target of cyber criminals because these are the ones that are least protected by security software and programs. In fact around 60-percent of small businesses have experienced getting victimized by data breach and some of it are experiencing it frequently because still, even though we are continuing to getting more advanced with our technology, we have not developed a superior security system that ensures these people who regularly loses income and valuable data to people who also continues to find weaknesses in the current security system and programs available.

This kind of crime does not only damage your computer system and it also damages your reputation because you are putting your customers at risk from these cyber criminals that are why a lot of businesses opted to avail cyber risk insurance or insurance for technology companies for precautionary measures and also to cover up other risks involved in cyber crimes.

Also known as technology insurance, it covers risks mainly found in the cyber industry or e-commerce like data breaches, cyber hacking, software errors, IT product malfunction and other technology-related issues that can be legally covered by insurance companies that offer this kind of insurance quote.

Most insurance companies that offer this type of insurance helps its client obtain a cyber insurance policy which is mainly designed and mainly functions as an organization to mitigate the risks present in all fronts of a business using a computer system to cover the offset costs that is involved to recover from the cyber-related issue or any similar events.

To provide you a simpler explanation about cyber risk insurance, it is an insurance policy that is used to protect a business’ and individual users from cyber-crime related issues and internet-based risks or generally from all types of risks that are mainly related to information technology’s activities and infrastructures.

However, cyber risk insurance is excluded from the risks from traditional commercial general liability policy or it does not specifically fall under the categories of other insurance products, meaning it is entirely unique and has its own policies, and terms and conditions and will only be applied or cover its client’s claim if it is mainly related to IT issues.

The coverage that falls under cyber risk insurance policy includes:

  • Data Destruction
  • Virus Infection
  • Malware Infection
  • Software malfunction
  • Extortion
  • Theft
  • Cyber hacking
  • Identity theft
  • Fraudulent transactions

The mentioned list above is covered by the insurance policy if it causes damages, losses, errors, omissions, or failure to safeguard the computer system’s data and even defamation. Other benefits which are included in this type of insurance policy is security-audit, investigative expenses, criminal reward funds, and post-incident public relations.