You can purchase insurance for just about anything, including cybersecurity. Known as cybersecurity insurance or simply cyber insurance, it offers financial protection for businesses and individuals alike in the event of a cyber attack. Because it’s an optional form of insurance, though, you might be wondering if it’s worth the cost. After all, how often would you really use it? While cybersecurity insurance isn’t free, it may still prove beneficial, especially if your business’s operations rely heavily on an information technology (IT) infrastructure.
What Is Cybersecurity Insurance?
As explained by the U.S. Department of Homeland Security (DHS), cybersecurity insurance is a form of insurance that covers some or all of the costs associated with a cyber attack. Assuming your business has cybersecurity insurance, the provider will compensate you for losses if your business sustains a cyber attack.
Advantages of Cybersecurity Insurance
With a cybersecurity insurance policy, you can rest assured knowing that your business will be financially protected if it sustains an otherwise costly cyber attack. Statistics show that small businesses lose roughly $80,000 annually from cyber attacks. While it’s best to avoid cyber attacks, this isn’t always possible. The good news is that cybersecurity insurance can help you recoup the costs of a cyber attack so that it doesn’t adversely affect your business’s operations.
Cybersecurity insurance may even lower your business’s risk of sustaining cyber attacks. Providers of cybersecurity insurance typically offer discounts on premiums for implementing and using cybersecurity measures. Just like car insurance providers offer “safe driving” discounts, cybersecurity insurance providers offer discounts for minimizing the risk of cyber attacks.
Disadvantages of Cybersecurity Insurance
On the other hand, cybersecurity insurance requires a monetary investment. It’s not just a one-time payment. Rather, like most forms of insurance, cybersecurity insurance requires monthly or annual payments. The exact cost varies depending on your business’s risk factors — IT usage, safeguards in place, etc. — but it’s not uncommon for businesses to pay anywhere from $2,000 to $6,000 per year.
With that said, the nominal cost of cybersecurity insurance is a small price to pay considering the financial protection it offers for your business. Hopefully you never have to use it, but if your business sustains a costly and damaging cyber attack, you can rest assured knowing that it won’t send your business into financial turmoil. Just remember to choose a cybersecurity insurance plan with an adequate amount of coverage for the highest level of financial protection possible.