The loss, compromise or theft of electronic data can have a drastic impact on a business, including the loss of customers and revenue. The purpose of cyber risk insurance is to protect businesses against the risk of cyber events, including those associated with terrorism. In the event of a cyberattack or incident, cyber-risk coverage can provide a timely remedy.

There are many intermediaries that provide insurance policies related to business. These include E&O insurance, business liability insurance, and commercial property insurance. The majority of insurance policies include first-party coverage, which protects a company from losses immediately caused by a cyber-event or incident, as well as third-party coverage, which protects others from losses caused by cyber events or incidents associated with the company.

A cyber insurance policy is designed to protect against financial loss resulting from cyber events and incidents. Furthermore, cyber-risk coverage provides assistance with remediation costs, such as legal assistance, investigators, crisis communicators, and credit or refunds to customers.

The annual revenue and industry of the insured entity are primarily used to determine the price for cyber insurance. The insurance company will conduct a security audit on the individual or entity in order to determine eligibility or provide documentation using an approved assessment tool. The results from a security audit or the documentation from approved assessment tools will play a vital role in assessing the types of coverage provided by the cyber insurance provider, as well as the cost of the premiums.

As cybersecurity insurance is a new product, policies will vary widely between providers. Companies should carefully review policy details to ensure they are getting the protections and provisions they need. Additionally, companies should evaluate whether their policies provide protection against known and emerging cyber threats.