What is Cyber Insurance, and is it Necessary?

Cyber insurance is a type of insurance product designed to help businesses and individuals protect themselves from potential risks associated with digital activities and the internet. These risks can include data breaches, cyberattacks, network damage, and business interruption due to cyber incidents.

There are two main types of cyber insurance: first-party coverage and third-party coverage.

1. First-party coverage covers losses directly incurred by the insured party. For instance, it may cover costs related to data recovery, business interruption, customer notification, credit monitoring services, and extortion payments made due to ransomware attacks.

2. Third-party coverage protects against claims made by people or organizations harmed by the insured’s actions. For example, if a company’s data breach results in customers’ personal information being stolen, those customers might sue the company. Third-party cyber insurance would cover the legal costs associated with such lawsuits.

Given the increasing prevalence of cyberattacks, cyber insurance has become necessary for many businesses. It can provide significant financial protection against digital activities and internet risks.

If you are a business owner or individual responsible for any digital activity, it is essential to consider this type of coverage. Cyber liability is an ever-evolving risk with serious financial and reputational implications.

It’s worth noting that cyber insurance is not a substitute for implementing effective cybersecurity measures. A comprehensive risk management strategy should include proactive cybersecurity defenses and a response and recovery plan for cyber incidents.

Cyber insurance can be a crucial part of your risk management strategy, so it’s important to understand the types of coverage offered and ensure you are adequately protected.

Call Brennan & Stuart Inc. at 815-223-0137 to learn more about cyber insurance. We have experienced brokers who can help you assess your needs and find the right coverage for your business or organization.

Brennan & Stuart

222 Bucklin Street

La Salle, IL 61301

815-223-0137

www.brennanstuart.com