Insuranceciooutlook

Reading the Fine Print is a Must for Cyber Insurance Purchase, Here's Why

By Insurance CIO Outlook | Thursday, June 27, 2019

Cyber Insurance Reading a fine print before buying cyber insurance gives a brief idea on what organizations are signing up for.

FREMONT, CA: The fundamental reason to buy insurance is to anticipate the cost of an accident or other emergencies from breaking the bank. IT security experts know very well that some risks just can’t be mitigated. Seeking out risk transference through cyber insurance is one of a case. Buying cyber insurance is, however, not as easy as buying other corporate insurance policies. It lacks a comprehensive history of risks and losses. Cyber is a risk that is changing quicker than insurers can accumulate experience data.

The base deductible is the most apparent coverage gap that insurance seekers are seeing. There are ingenious forms of coverage gaps, as well. In the world of business loss and law, there are several classes of damages, depending on when and how they occur. Losses due to cyber extortion, losses related to mitigating, and investigating an incident, including computer forensics and consultants, expenses associated with remediation activities are some possible impacts before looking for cyber insurance. Loss or damage to data or software, direct monetary losses from electronic theft, phishing, email scam, or other types of cybercrime or expenses related to liability exposures due to the incident are few more points that should be kept in mind before buying cyber insurance.

Sometimes cyber insurance claims are dismissed because an organization disqualified itself. A detailed questionnaire and technical questions that are lengthy is an exhausting process when applying for insurance. Company responses must be complete and honest; otherwise, the viability of the insurance contract could be revoked. This is a notable risk in cyber insurance because many IT security practices are not 100 percent perfect.

Every customer of cyber insurance should carefully verify whether cyber insurance covers the type of risks that an organization might face and ensure that any limits on recovery are consistent with possible damages. CISOs should understand all the potential impacts and costs of a breach and compare them to their cyber insurance policies. Having legal help with deep expertise in this area is a reasonable investment before buying, reading the fine print before the purchase makes the process a lot more meaningful. 

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