Cyber Insurance – What Is It and Who Needs It?

Technology is everywhere – both obvious and hidden.

We as individuals and businesses use technology daily – cell phones, computers, TVs. Technology is also integrated into many other common conveniences like ATMs and even some refrigerators now have Bluetooth technology built in. Our most vital information, from bank account numbers to medical records, is stored across different servers and local devices.

So if security protocols are breached, what kind of damage can be expected?

IBM’s 2018 Cost of a Data Breach Study found that the average cost for an organizational data breach is $3.86 million. That’s up 6.7% from 2017. The direct costs include repairs to compromised systems, efforts to recover and secure stolen information, and efforts to remedy a variety of other damages and losses. The indirect, and sometimes most detrimental, costs include damage to the reputation and credibility of the organization.

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Is it possible to be 100% protected from a security breach?

No, it’s not.

As technology evolves, so do the skills of hackers and cybercriminals. It’s a mistake to believe any organization is completely immune to a security breach.

However, it is possible to enable safety nets and security measures that lower the chances of a breach occurring and mitigate the damages if one does. That is why IT support, cybersecurity, and cyber insurance industries are growing at a fast pace.

We’re all familiar with the concepts of cybersecurity and IT support, but what is cyber insurance?

The International Risk Management Institute defines cyber insurance as,

“A type of insurance designed to cover consumers of technology services or products. More specifically, the policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network….The policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.”

Who needs cyber insurance?

Organizations such as banks, hospitals, or school systems that handle large quantities of personal or confidential information have a greater need for cyber insurance than mom-and-pop shops.

Think of it this way, if you live in an area prone to flooding, it’s wise to buy flood insurance. However, if you live in a desert, flooding is less likely to affect you.

Here’s how John McInturff explained Greeneville’s cyber insurance coverage:

“Cyber insurance includes security breaches and covers all county departments. Whether it’s personal information, or even credit card information being transmitted to the credit card companies, it will be covered by the county’s insurance.” – John McInturff (The Greeneville Sun)

If you have questions about cyber insurance or other types of business insurancecontact McInturff, Milligan & Brooks via the form below or at (423) 639-5171. We can help you figure out what is best for you.

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