Checklist for Choosing Business Cyber Insurance

Published May 28, 2024
by Jordan Hickam

In an interconnected digital world, cyber insurance has emerged as a critical safeguard for businesses against the financial repercussions of cyber threats. Cyber insurance offers organizations a financial, reputational, and legal safety net in the event of a cyberattack. Cyber insurance can help cover expenses inflicted by many common cybersecurity risks, but choosing the right policy and provider for your organization can be daunting. Following a checklist like the one provided here can make the process smoother.

Determine Coverage Needed

The coverage amount needed will vary based on several factors. The following steps can help you determine an approximate coverage amount for your organization.

Conduct a Risk Assessment

  • Evaluate your organization’s susceptibility to various cyber incidents, including data breaches, ransomware attacks, business interruption, etc.
  • Identify the types of data you handle, such as personally identifiable information (PII), protected health information (PHI), or financial data, and understand the potential impact of their exposure.
  • Assess the criticality of your IT infrastructure and the potential costs associated with its downtime.

Analyze Past Incidents

  • Review any previous cyber incidents your organization has faced, including their nature, response costs, and overall impact.
  • Consider industry-specific data and benchmarks to understand typical cyber incident scenarios and their financial repercussions.

Understand Legal and Regulatory Requirements

  • Familiarize yourself with your jurisdiction’s legal and regulatory obligations related to data protection and breach notification.
  • Account for potential regulatory fines, legal fees, and settlement costs arising from non-compliance or data breaches.

Evaluate Business Interruption Risks

  • Estimate the potential loss of income and extra expenses your business would incur if a cyber event disrupted your operations.
  • Consider the duration of potential downtime and its financial impact on your organization.

Estimate Incident Response Costs

  • Calculate potential costs associated with incident response, including forensic investigations, data recovery, crisis management, public relations efforts, and customer notification.

Consider Third-Party Liabilities

  • Assess the potential costs of third-party claims, including legal defense, settlements, and any judgments against your organization.

Factor in Cyber Extortion Risks

  • Evaluate the potential risks and costs associated with cyber extortion incidents, such as ransomware demands.

Consult with Industry Experts

  • Work with your insurer to tailor your cyber insurance policy, ensuring it addresses your organization’s unique risks and coverage requirements.

Assess Insurers’ Claims Process

The following list can help you evaluate the insurer’s claims process to ensure it is straightforward and responsive.

  • Clarity and Simplicity: Look for insurers that provide a clear and straightforward claims process. You should be able to understand the steps involved easily, from initial notification to claim resolution.
  • Notification Procedures: Check the insurer’s requirements for incident notification. Quick and easy reporting mechanisms are crucial for a timely response to cyber incidents.
  • Response Time: Assess the insurer’s track record for response times. After filing a claim, you should expect a prompt response acknowledging receipt and outlining the next steps.
  • Expertise: Ensure the insurance company has experienced claims handlers specifically trained for cyber incidents. Their expertise can significantly affect the outcomes of claims and recovery processes.
  • Communication: Look for insurers with a policy of maintaining open and consistent communication throughout the claims process. Regular updates on the status of your claim and the next steps should be standard.
  • Support for Investigation: Determine if the insurer provides support for forensic investigations, which are critical in understanding the scope and impact of a cyber incident.
  • Settlement Efficiency: Understand the insurer’s process for determining claim settlements and their history of dealing with claims efficiently and fairly.
  • Dispute Resolution: Check the insurer’s policy for handling disputes over claims. Knowing you have a fair process for resolving disagreements can provide peace of mind.

Assess Insurers’ Support

Cyber insurance is not a “get it and forget it” investment. Look for insurers who can provide you with the following reassurances that they will be long-term partners.

  • 24/7 Assistance: Ensure the insurer offers 24/7 support, as cyber incidents can occur anytime and require immediate response.
  • Incident Response Team: Verify if the insurer provides access to an incident response team or network of cybersecurity professionals to assist you in managing and recovering from a cyber incident.
  • Proactive Risk Management: Choose insurers that offer risk management resources and tools to help you strengthen your cybersecurity posture before any incident occurs.
  • Education and Training: Look for insurers that provide educational resources and training opportunities to help you and your staff stay informed about cyber threats and best practices.
  • Partnerships: Some insurers have partnerships with cybersecurity firms, providing access to additional resources and services, which can be beneficial in enhancing your overall cybersecurity.
  • Policy Flexibility: The insurer should be willing to work with you to adjust coverage as your business grows and your risk landscape changes.
  • Reputation and Financial Stability: Select an insurer with a strong reputation and financial stability, ensuring they can support you when a claim arises.

The Smart First Step: Join RAMPxchange

Cyber insurance may be complex, but finding a supportive partner with policies that meet your needs doesn’t have to be overwhelming. Business leaders are finding true partners in cybersecurity in the RAMPxchange marketplace. Join the collaborative community to connect with prospective providers. Compare highly rated options and glean insight from peer reviews to find and maintain the perfect cyber insurance for your organization. Contact a team member today to learn more and get started.