UK Cyber Security Insurance – Is Coverage Worth It?
Every day, an average of 278 new business data breaches start being investigated by UK and EU authorities. Almost all of these result in regulatory fines, consumers seeking compensation, and severe business disruption. Many UK businesses are, therefore, starting to invest in cyber security insurance.
Proponents say that cyber security insurance can guarantee the continuity of your business after data breaches. However, cyber liability coverage can cost thousands of pounds a year. Here, we’ll, therefore, take a look at what coverage offers,
Is Cyber Security Insurance Worth It?
Are you considering investing in cyber security insurance? If so, it is important to remember that insurance does not do anything to prevent data breaches from occurring. Even with cyber liability insurance, your business still needs to do all it can to prevent cyber security threats.
- Most insurers will not pay to cover the cost of data breaches that occur due to your business not taking reasonable steps to prevent hackers from gaining access to data.
- Whether you need insurance and what level of cover you require, will depend on your company industry, operating practices, and annual turnover.
- Not purchasing coverage that is suitable for the level of risk your business faces, can be as detrimental as not purchasing coverage at all.
What Does Cyber Liability Insurance Cover?
What cyber security insurance covers will vary from policy to policy. However, insurance generally covers a businesses’ liability for data breaches that result in the theft of sensitive customer or employee information.
Typically, sensitive consumer data includes consumer credit card information, banking details, identity details, and health records. However, to fully cover the cost of breaches, most businesses will need to invest in first-party and third-party cyber insurance.
First-Party and Third-Party Cyber Insurance Basics
The differences between first-party and third-party cyber security insurance are simple.
With first-party coverage, insurers typically cover the cost of maintaining business operations after data breaches. In practice, this sees insurers cover the cost of investigations into hacks, as well as the repair of physical IT infrastructure.
- Insurers may cover financial losses brought about as a result of significant business downtime.
- Cyber security insurance will typically cover the cost of notifying consumers of data breaches.
- In some cases, cyber insurance will cover the cost of extortion payments to hackers in the form of ransom payments.
With third-party cyber liability insurance, insurers also cover the cost of legal challenges arising from data breaches. This can include financial cover for damages payable to affected consumers.
What Does Cyber Insurance Not Cover?
As a rule, cyber liability insurance does not cover the cost of upgrading company IT systems after cyber attacks. Neither can cyber insurance always cover the cost of regulatory fines arising from data breaches.
In most EU member states, punitive regulatory fines like GDPR fines are not insurable by law. However, many cyber insurance policies use creative wording to obfuscate this fact. This is important, as regulatory fines can be imposed wherever your business operates.
Do You Need to Invest in Cyber Security Insurance?
At Defensity, we work with hundreds of small UK businesses to assess their real level of risk when it comes to cyber security threats.
At present, experience shows us that many UK businesses are paying for cyber insurance cover that offers little real protection if data beaches do ever manifest. This being the case, we invite small to medium-size enterprises to contact us before investing in coverage.
When you reach out to Defensity, we will asses your real level of risk of data breaches. Where cyber insurance will be beneficial, we then help you identify policies that cater directly to the needs of your business. To find out more, reach out to us now to speak to one of our team.