Cyber insurance shopper checklist: Things to consider before hiring these services

Information security related incidents have become so common that any organization, whether it is a major multinational company or a small business, must consider any possible protective measures against disastrous consequences that, a data breach, for example, can cause.

Cybersecurity incident insurance policies have become a widely used option over the past year. However, there are multiple variables that parties interested in these products should consider before contracting such a service, as a hasty decision can result in a mistaken purchase.

According to information security experts, one of the key aspects to consider before hiring a cybersecurity policy is to analyze liability coverage, in other words, that insurance covers any costs generated by a hacking incident or data breach. These costs can result from first party incidents (occurring in the company itself) and third party incidents (related to any external company or individual).

Specialists believe that an appropriate protection plan should contain at least the following points:

  • Legal fees: Costs to cover legal representation fees for the affected company
  • Digital forensic fees: If your company was the victim of a data breach or security violation, you will need to hire third-party forensic experts to conduct an independent investigation; this is one of the most important aspects to consider, as these services are not economical
  • Notification fees: This is the investment required to notify each user affected by a cybersecurity incident about the status of their personal information; almost any data protection legislation demands that this step be met
  • Business disruption costs: In some cases cybersecurity incidents seriously disrupt operations in a company, so having a policy to mitigate this financial impact is critical
  • Costs of protection to affected parties: A data breach victim company should provide protection to every affected user; this protection includes bank status monitoring services and protection against identity theft
  • Fines for non-compliance: Affected companies may receive fines or penalties established in accordance with the data protection legislation of each country or region (such as the GDPR, which applies throughout the European Union)

There are many insurance policies on the market that offer coverage in these fundamental aspects, however, information security experts point out that the amount of coverage can widely vary depending on each insurance company. In addition, company executives (especially small and medium-sized businesses) should consider that purchasing one of these services, even the most basic plans, is really expensive, so they should make sure they’re not paying for services that they don’t really need.

Last but not least, information security specialists from the International Institute of Cyber Security mention that there are many situations that could void a cybersecurity policy. For example, if a company stores its users’ data in an unsecure location, it is safest for the insurer to negate the policy, so all costs must be covered by the affected company. It is essential to have adequate IT infrastructure, as well as correct cybersecurity policies and practices before hiring these services; before looking for others to correct your mistakes, make sure you don’t fall into them.