A Complete Guide To Cyber Security Insurance

The rates of cyber-crimes in the recent past are alarming. According to a report by dataprot, 59% of Americans report they have experienced cybercrime or fallen into the hands of…

June 24, 2022

Written by Justin Sloan

The rates of cyber-crimes in the recent past are alarming. According to a report by dataprot, 59% of Americans report they have experienced cybercrime or fallen into the hands of a cyber-criminal.

Almost 70% of small businesses are utterly unprepared for a cyber-attack. Nearly 88% of professional hackers can access an organization’s network in at least 12 hours. The most common cyber-crimes that businesses, organizations, and companies are vulnerable to are identity theft, data breach, cyber extortion, and phishing.

Cyber security breaches and incidents have led to the rise of cyber security insurance. This type of insurance can be explained as a contract protecting businesses against financial losses caused by cyber-attacks. The most common cyber-attacks include denial of service, extortion payments, system hacking, data breach, and theft, etc. Read through the article to learn various aspects of cyber security, the types of cyber security insurance, and the reasons why your business may need it.

6 Aspects of Cyber Security

Cyber security refers to the practice of protecting data, networks, electronic systems, mobile devices, servers, and computers from malicious attacks. There are several elements of cyber security, which we’ll explore in detail below:

  • Operational security
  • End-user security
  • Network security
  • Disaster recovery planning
  • Information security
  • Application security
  1. Operational Security

Operational security can be defined as a security and risk management process. It aims at identifying the actions that could reveal sensitive or critical information to cyber criminals attempting to breach a network. It is also referred to as OPSEC. 

OPSEC involves five significant steps: identification of sensitive data, scrutiny of threats, analysis of vulnerabilities, and evaluation of risk and application of appropriate countermeasures. In other words, operation security encompasses all the information technology security processes.

  1. End-User Security

End–user security is the process of preventing unauthorized personnel from targeting endpoints of end-user computers such as handheld devices or desktops. End-user security is crucial because almost 84% of cyber-attacks begin with a phishing email

This type of security is executed in several ways, including keeping devices updated, remote management and device detection, DNS filtering to block malicious websites, managed Antivirus, etc. All companies and businesses need an enhanced end-user security in all the devices within the company.

  1. Network Security

Network security is a form of cyber security that protects your network and data from intrusions, breaches, and other threats. There are three main types of network security; 

  • Cloud services
  • Software
  • Hardware.

Companies can execute network security through web security, firewalls, email security, mobile device security, behavioral analytics, and antivirus software. All these systems are designed to ensure that only authorized users/personnel have access to the network and aren’t up to any malicious attempts.

  1. Disaster Recovery Planning

Disaster recovery planning is a form of cyber security responsible for ensuring your business can continue operating in case of data breaches, DDoS attacks, etc. Disaster recovery protection has two main components: strategies for preventing virus infection or data breaches and procedures for efficient recovery in case an attack is successful. It is executed through strong endpoint protection, incident response drills, and a robust backup recovery system.

  1. Information Security

Information security is a process that aims to keep data secure from unauthorized alterations or access when it’s stored. When it’s being transmitted from one machine to another, it is also referred to as data security. Information security is based on five major principles:

  • Confidentiality
  • Integrity
  • Availability
  • Authentication
  • Nonrepudiation

Cyber security companies look at how you collect, store and transmit data. They stage protections to ensure that data is encrypted and protected from potential breaches.

  1. Application Security

Application security involves the development, addition, and testing of security features within applications to prevent unauthorized modification and access. It is essential in businesses and companies which use primary cloud services such as Microsoft 365. Application security is executed using various features such as logging, encryption, authorization, authentication, and application security testing. Cyber security companies also code applications to reduce potential cyber threats.

These are the main aspects of cybersecurity that a good cybersecurity company should have and execute effectively for maximum protection.

Cyber Security Insurance

There is a lot to know about cyber insurance; read through this section to learn about cybersecurity insurance, its importance, how it works, etc.

As mentioned earlier, cyber security insurance is a contract that protects organizations against financial losses caused by cyber-attacks such as denial of service, ransomware extortion payments, system hacking, data breach, theft, etc.

Types of Cyber Security Insurance vs. How It Works

To understand how cyber security insurance works, we need to understand the types of cyber liability insurance. The types of cyber security insurance are divided into two main categories; first and third party coverage. 

First-party Coverage

First-party cyber insurance coverage is responsible for the loss of property or income resulting from a cyber-attack. They include:

  • Fraud and theft coverage
  • Forensic investigation coverage
  • Extortion/blackmail coverage
  • Data loss and restoration coverage
  • Business interruptions

Fraud and Theft Coverage

This insurance coverage is used to pay for the destruction or loss of data that might have occurred due to the theft of information or information acquired through fraudulent methods.

Forensic Investigation Coverage

This insurance coverage is responsible for paying the costs of investigation that may follow after a cyber-attack. The cyber security insurance company will be responsible for all the forensic services necessary to build a case.

Extortion/Blackmail Coverage

Cyber criminals may hack and hold your computer system, website, data, or sensitive information hostage until you meet their monetary or otherwise demands. Extortion coverage pays for the losses incurred during such an incident.

Data Loss and Restoration Coverage

Data loss in a network might occur due to power failure, malware, viruses, human error, cyber-attacks, mechanical failure, or physical damage to computers and technology systems. Data loss and restoration coverage are responsible for the costs incurred through the loss of that data and the cost of restoring the lost data.

Business Interruptions

In the case of a cyber-attack, extortion, power failure, or viruses within the network, there’s a business interruption and thus loss of income or any other inconvenience to the business. Business interruption coverage pays for the resulting losses/inconveniences.

Third-party Coverage

On the other hand, third-party insurance focuses on the insured person’s obligations to compensate those affected by others’ actions or omissions. This process is usually settled among insurers without involving the individual parties involved. Third-party coverages include:

  • Litigation coverage
  • Communications and notifications coverage
  • Crisis and emergencies measures coverage
  • Liability for media issues
  • Liability for breach of privacy and confidence

Litigation Coverage

In the case of a cyber-attack, there’s an investigation to find the cyber criminals responsible. If the investigation is successful, the cyber criminals are taken to court for adjudication. Litigation coverage pays for all the fees involved, such as lawyer and court fees.

Liability for Media Issues

Liability for media issues within cyber security insurance covers expenses related to media overtures after a cyber-attack incident.

Crisis and Emergencies Measures Coverage

This covers the expenses that may arise after cyber security has been compromised, for instance, if the public has to be warned so that they take specific measures.

Liability for Breach of Privacy and Confidence

Liability for breach of privacy and confidence covers the expenses if a client’s/stakeholder’s/employee’s confidential information was accessed in a data breach.

Communications and Notifications Coverage

Last but not least, this covers all the expenses incurred when notifying all the necessary stakeholders, clients, or employees about the incident.

Importance of Cyber Security Insurance

Cyber security insurance has 5 main benefits to a business, organization, or company. Below is a listing and detailed section of why you need cyber security insurance for your business, organization, or company:

  • Legal Support: In the case of a cyber incident, your business may need to take legal steps, which is often costly. With cyber security insurance, the insurer will get you professional legal assistance and cover the expense
  • Forensic Support: Forensic steps must be executed before approaching the court and filing a lawsuit. With excellent cybersecurity insurance, you’ll be able to complete investigations concerning the cyber incident
  • Cyber Extortion Defense: As explained earlier, cyber extortion might involve paying a considerable amount of money. Your cyber security insurer will pay the expenses incurred in the incident in such a case
  • Business Interruption Loss Reimbursement: A cyber incident can lead to inconveniences within the network that affect business operations, thus costing your business time and money. However, with cyber security insurance, you’re compensated in case of such an incident
  • Data Breach Compensation: Data breach costs, security fixes, and theft protection can be quite costly, but you don’t have to worry about anything with cyber security insurance. Cyber security insurance includes coverage that covers expenses related to a data breach.

Nesso Insurance – Helping You Protect Your Business While It Grows

The alarming rates and increase in cyber-crime have led to the rise of a new industry in business referred to as cyber security insurance. Nesso Insurance is a trustworthy option for cyber security insurance services. We pride ourselves in being among the first companies that have ventured into offering cyber security insurance services.

At Nesso Group, we’re dedicated to providing your company, business, or organization with comprehensive cyber liability insurance services. Additionally, we offer both first-part and third-part insurance coverage. Contact us today for information on pricing and other details.

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