Page 51 - The Insurance Times December 2024

Cyber Insurance

What cyber insurance can do for you and

what in can't

I n today’s digital age, where businesses and individuals Cyber insurance does not cover physical damage to prop-
erty. Any loss from power disruption, mechanical malfunc-
increasingly rely on technology, cyber insurance has be-
come a vital tool to protect against financial losses and tion, equipment failure is not covered. Fines or penalties
reputational damage. However, companies must understand imposed by government authorities for non-compliance with
the various facets of cyber insurance in order to effectively data protection laws are generally not covered. Any breach
leverage it. of trade secrets, trademarks, registered patents, or alleged
plagiarism will not be covered.
Cyber insurance coverage varies, depending upon industry and
requirement. It typically covers business losses, including those Some policies do not pay if data is stolen or services breached
for breach, interruption, recovery, forensic, cyber extortion at vendors and other partners unless specifically called out.
Insider threats like malicious or negligent employees are
and third-party cost (for damages suffered by parties outside
often excluded. Most insurance plans do not cover outages
business) covering regulatory and legal liability, intellectual
caused by mis-configuration and other internal errors (not
property right infringement, multimedia liability, disclosure
caused by cyber-attacks).
liability, and reputational liability.
In India, where businesses and individuals are adopting digi-
Such insurance policies offer coverage for a range of cyber- tal technologies, cyber insurance has become a critical risk
related incidents, including for data breaches like
management tool. Here is how it can help:
unauthorised access, theft or disclosure of sensitive data.
Financial protection: By covering the cost of data
They protect against ransom payments, data restoration
breaches and ransom ware attacks, cyber insurance
costs and business interruption losses. Coverage for cyber protects against financial losses.
extortion offers protection against threats of data disclosure
Business continuity: In the event of a cyber-attack, it
or system disruption in exchange for a ransom.
can help businesses minimise disruptions and protect
Then there is coverage for costs associated with identifying
their reputation.
containing and remediating network security breaches.
Reimbursement is provided for lost income and expenses Regulatory compliance: Cyber insurance can help busi-
nesses meet regulatory requirements, such as the Per-
incurred due to cyber-attacks. If a business duffer's electronic
sonal Data Protection Act.
fraud, insurance will protect against fraudulent transactions
such as unauthorised wire transfers or online purchases. Risk management: By assessing and managing their
There is also insurance for third-party claims arising from cyber risks, businesses can improve security and reduce
cyber-related incidents, including defamation, copyright in- their exposure to threats.
fringement, and privacy violations. By understanding what cyber insurance covers, what it does
While cyber insurance offers comprehensive protection, it not and how it can help in managing digital threats, busi-
is important to understand its limitations. Exclusions depend nesses and individuals can better protect themselves against
on policy and we list some common ones. Cyber insurance the risks associated with cyber-attacks.
coverage typically does not extend to losses resulting from Furthermore, it provides not only financial protection but
Intentional acts of the insured or their employees. Bodily also access to critical resources, such as expert legal coun-
injury, diseases or death to any tangible item are not cov- sel and incident response teams. This holistic approach en-
ered. Cyber-attacks related to acts of war or terrorism and sures that organisations can recover swiftly from attacks
often excluded. while reinforcing their cyber-security posture.

46 December 2024 The Insurance Times