Warning: The Hole In Your Cyber-Insurance Policy That Could Result In Your Claim Being Denied Coverage
7 Aug 2023You've likely heard the alarming statistics that small businesses are prime targets for cybercriminals due to their vulnerability. According to Security Magazine, approximately 63% of small businesses have faced cyber-attacks, and 58% have experienced actual breaches. However, what many still fail to grasp is the exorbitant cost of a cyber-attack.
This realization has led to the rapid growth of cyber liability insurance, which covers the substantial expenses associated with a breach. Such coverage may include legal fees to handle lawsuits, fines, and penalties resulting from regulatory investigations. It also encompasses negotiating and paying ransomware demands, data restoration and emergency IT fees, customer notifications, credit and identity theft monitoring, public relations expertise, call center costs, and loss of revenue due to disrupted operations.
To ensure protection against cyber threats, businesses seeking coverage must implement robust cyber protections. Insurance companies require evidence of comprehensive measures to minimize the risk and financial impact of cyber-attacks. Unfortunately, many business owners sign off on having such policies and protections without fully implementing them, assuming their IT company is handling it. This misconception could lead to insurance denials and policy cancellations if they are unable to provide concrete proof of the preventive measures they claimed to have in place.
To avoid such issues, it is crucial to work closely with your IT company to ensure 100% compliance with the security standards and protocols outlined in your insurance application. In case of a breach, insurance providers will investigate to determine if the preventive measures were adequately implemented. If they find any discrepancies between your claims and reality, they may deny your claim.
If you have concerns about your coverage or want to assess your cybersecurity preparedness, consider scheduling a consultation with an insurance expert or conducting a free cyber security risk assessment. Taking proactive steps now can safeguard your business from potential cyber threats and ensure you have the necessary support in case of an unfortunate event.
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