What is cyber insurance?
Cyber insurance is a relatively young and fast evolving line of insurance products for businesses that broadly cover costs related to information technology.
Today, cyber insurance—also known as cyber risk insurance or cybersecurity insurance—protects businesses from the unpredictable impact of hackers and other cybercrimes ranging from malware to ransomware and any other method used to compromise a system and its data. It should be noted that more common general liability insurance policies do not cover the types of risks covered by cyber insurance. About one-third of U.S. businesses are believed to hold cyber insurance policies, a market that's expected to grow to $7.5 billion in the next decade. Insurance providers note that any organization that uses technology or the Internet faces cybersecurity risks. In the case of healthcare providers, those risks include fines and other penalties related to HIPAA compliance.
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"Hackers can target personally identifiable information (PII) or personal health information (PHI) you keep on your business’ computers," explains The Hartford. "These coverages can help if your business’ computers get a virus that exposes private, sensitive information; customers or patients sue after your business loses PII or PHI; or you’re faced with high public relations costs to help protect your business’ reputation after a data breach."
How much does cyber insurance cost?
The cost of cyber insurance policies varies greatly, depending on the size of the company and its annual revenue. Other factors include the industry in which the business operates in, and the types of data that the business handles. Not surprisingly, healthcare organizations will typically pay more for cyber insurance than other types of businesses. Insurance companies will also evaluate a potential client's IT and network security practices. Following cybersecurity best practices, providing ongoing cybersecurity training, and implementing HIPAA compliant email could all help reduce the cost of cyber insurance. By at least one account, a cyber insurance policy can cost between $650 to $120,000 a year.