For businesses of all sizes, cyberattacks are not just a possibility — they’re one of your largest exposures. Cyber risk insurance covers businesses for losses caused by cyber incidents, including system failure, human error and malicious attacks. It also provides coverage for first-party and third-party claims. Learn more about cyber risk insurance security benefits and what might be excluded or limited.
What to consider with cyber insurance coverage
To determine the level of coverage you need for cyber insurance, our Client Managers consider the type of business you have, your IT infrastructure, risk management policies and standards and the types of data you store. Typical inclusions for cyber insurance policies are losses to your business and loss to others after a cyber incident and include coverage for:
- Customer notifications
- Impact costs
- Ongoing credit control monitoring
- Increased costs of working
- IT forensics
- Loss of profits
- Penalties and fines
- Preventative shutdown
- Public relations and reputational damage costs
- Ransom demands
- Regulatory investigations, and
- Virus extraction.
What does cyber risk insurance cover?
To ensure your business has adequate coverage against cyberattacks, Atlantic Insurance tailors cyber insurance policies that typically include the following.
Business interruption
Cyberattacks, including ransomware and distributed denial-of-service (DDoS) attacks, can lead to significant downtime and stop your business from operating. Business interruption insurance within your cyber risk insurance policy can cover the income lost during the period of disruption. It can also include the costs associated with restoring systems to normal.
Data breaches
The most common cyber threats are data breaches, where sensitive company or customer information is compromised. Cyber insurance typically covers the costs associated with these data breaches, including notifying affected parties, paying for legal fees and penalties, and offering credit monitoring services for customers whose data may have been breached or stolen.
Extortion and ransomware
Cyber insurance policies can cover extortion-related expenses, including negotiation costs. They also cover ransomware attacks and ransom payments. Cyber insurance can provide funds to pay ransoms if there’s no other option to resume operations or restore data.
Forensic Investigation
After a cyber event, businesses will need to understand the root cause of the attack, contain it, and assess the extent of the damage. Cyber insurance can cover the costs of forensic investigations.
Liability for third-party data loss
If sensitive data belonging to clients, customers, suppliers and other third parties is compromised, your business may be liable for the damages. Cyber insurance coverage is essential and can cover legal defence costs, judgements or settlements.
Penalties and legal fees
Businesses can face lawsuits or regulatory penalties when data is compromised. Cyber risk Insurance covers legal costs, settlement fees, and any regulatory fines that arise from data privacy violations, including those under the General Data Protection Regulation (GDPR) or other data protection laws.
Reputation management
A cyber incident can severely damage a company’s reputation, affect customer trust and impact market perception. Many cyber insurance policies include coverage for public relations efforts to help repair reputational damage through crisis communication and marketing efforts.
What isn't covered by cyber risk insurance?
While cyber insurance offers crucial protection, it’s essential to understand that not everything is covered. Standard exclusions or limitations can include:
- Costs for future upgrades: Cyber risk insurance won’t cover upgrading systems to prevent future attacks, such as implementing new security measures after an incident.
- Insider Threats: Many policies won’t cover losses stemming from intentional actions by employees or contractors, such as data theft or sabotage.
- Outdated or unmaintained systems: If a business uses outdated software or fails to apply critical security patches, insurers may deny claims by citing negligence in maintaining proper cybersecurity protocols.
- Pre-existing breaches: If a breach occurred before the cyber risk insurance policy went into effect, coverage is typically excluded for that specific event.
- War and terrorism exclusions: Some policies exclude coverage for cyberattacks classified as acts of war or terrorism. This can be a significant gap in a world where state-sponsored cyberattacks are becoming more common.
How to maximise your cyber insurance coverage
To get the most value out of a cyber insurance policy, businesses should take proactive steps that include:
- Implementing strong security measures, including firewalls, encryption, and regular software updates.
- Regularly reviewing policy details with your insurer to understand any changes in coverage and ensure that your business risks are adequately addressed.
- Training employees on cybersecurity best practices, including how to recognise phishing attempts.
While cyber insurance is a crucial safety net, it should be considered part of a broader risk management strategy that includes robust cybersecurity practices and a strong response plan.
Protect your business with Atlantic Insurance cyber insurance
For 10 years, Atlantic Insurance has been providing cyber risk insurance for businesses of all sizes and across multiple industries. With competitive premiums and interest-free monthly premiums in some cases, our Client Managers have access to a wide range of products and insurers. Contact us today at 03 9836 3733 for a comparison quote.
Any information contained on this page of the website is general advice only and has been prepared without taking into account your objectives, financial situation or needs. You should consider these, having regard to the appropriateness of this advice and the relevant Product Disclosure Statement (‘PDS’), Target Market Determination (‘TMD’) and Financial Services Guide (‘FSG’), which will be provided following any formal recommendation to you.