How Important is Having Cyber Insurance Coverage? 

Digital solutions have taken over much of the business world. Even in industries that may have previously relied primarily on manual labor, such as construction and farming, advanced technologies are now frequently used to enhance efficiency or innovate new methods. But while these implementations can have exciting potential, they may also create new risks and exposures or exacerbate existing concerns. Alongside the rise of digital solutions, cyber insurance has also emerged as a critical investment.

Why is Cyber Insurance Important?

In the digital era, many essential tasks are conducted in cyberspace. Additionally, sensitive information that may have previously been stowed away in locked file cabinets and secure offices are now often stored on electronic devices and cloud servers. Despite a business’s best cybersecurity efforts, such digital locations may never be completely safe from the efforts of hackers and cybercriminals. Even a single lapse in judgment or ill-advised click by an employee could compromise private data and incur costly consequences.

What can Policies Cover?

The financial implications of a cyber incident can be widespread and devastating. Fortunately, while exact coverage details may vary, a cyber insurance policy may be able to provide financial aid for the following losses and expenses:

• Incident response costs, such as hiring digital forensics investigators to identify the cause and scope of the breach or enlisting the help of a public relations firm to curb reputational harm

• Business interruption losses, including recouping lost income a company would have earned if not for a cyber incident, as well as extra expenses incurred to restore operations

• Noncompliance fines, which may be imposed by government agencies if the organization failed to comply with applicable cybersecurity or data protection regulations (subject to insurability in the jurisdiction)

• Legal expenses, such as attorney fees, court costs, settlements and judgments if affected parties decide to sue a business

Who Needs Coverage?

Just as businesses in many sectors may not have previously relied as heavily on digital technology, so too might their cyber insurance needs have been minimal. However, as use and reliance on such advancements have increased, so has the need for coverage. Additionally, cybercriminals have widened their target selection regarding businesses’ sizes. Whereas large corporations may have previously been primary targets, perpetrators have become increasingly likely to attack small- and medium-sized companies. With these considerations in mind, cyber insurance could be a valuable investment for most businesses regardless of size or sector.

How to Get the Right Policy

Sunstar Insurance of Arkansas in Little Rock, AR is standing by to help businesses address their cyber insurance needs. Contact us today to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.