With corporate data breaches on the rise, many business owners are rethinking their security practices and strategies for risk management. Hacks, breaches and network outages present more than just technology issues—they come with financial repercussions, a potential loss of customers and a negative reputation in the marketplace.
These potential consequences are leading business owners to adopt more-holistic approaches to security involving both preventative measures and response plans. Preventative measures help secure network defenses and implement best security practices. Response plans involve cybersecurity insurance, a policy designed specifically to trigger when a security incident occurs.
Cybersecurity insurance is a relatively new type of coverage, which explains why it’s often misunderstood. This article makes sense of cybersecurity insurance so business owners can better understand what types of coverage are available and ensure their business’s recovery after a cyberattack.
1. What Is Cybersecurity Insurance?
Cybersecurity insurance—sometimes referred to as cyber liability or data-breach liability insurance—is a type of standalone coverage. It helps companies recover from data loss owing to a security breach or other cyber event, such as a network outage or service interruption. Cybersecurity policies are different from property or general liability policies because prices and exclusions for cybersecurity insurance vary widely between insurers.
Although this situation may make choosing a policy more complicated, it shouldn’t deter business owners. Cybersecurity insurance is important to building a comprehensive strategy for risk management and response.
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