Ransomware Abounds! Does Cyber Insurance Cover Ransomware?

Summary: An overview of cyber insurance, including answers to “does cyber insurance cover ransomware” and “is cyber insurance worth it”?

How Can Small Businesses Prepare for a Catastrophic Cyberattack?

More and more small and midsized business (SMB) owners are asking the same question: Is cyber insurance worth it? Data breaches continue to skyrocket, and companies have to weigh the cost of cyber insurance vs. the cost of a cyberattack. Unfortunately, with cybercrime escalating at such an unprecedented rate and ransomware proliferating, the cost of cyber insurance has also gone up.

Is Cyber Insurance Worth It?

To determine whether cyber insurance is right for your company, you must first understand the costs of a data breach. Understanding the costs and consequences of cyberattacks is particularly important for small and midsized businesses. Unfortunately, SMBs are considered less prepared and more vulnerable and are, therefore, preferred targets of hackers. The sad reality is that almost 70% of cybercrime is perpetrated on smaller businesses.

Q: Why should small businesses get cyber insurance?

A: Such companies are increasingly targeted by cybercriminals because of their limited resources for cybersecurity. Cyber insurance mitigates the financial risks associated with cyberattacks, ensuring businesses can recover quickly without absorbing all the costs of a breach.

The costs of a cyberattack vary depending on the type of event. Here’s a short list of the average costs of possible consequences of an attack on an SMB:

• Viruses and Malware - $60,000 - $100,000
• Device Losses - $85,000 - $100,000
• IT Security Experts to Resolve Attacks - $20,000 - $50,000
• Lost Business and Public Relations Follow-up - $20,000 and up
• Legal and Notification Costs – Varies
• Regulatory Fines - Varies

Many SMBs wait until they’ve been attacked before hiring IT security experts. The problem with that approach is that beyond the cost of restoring the system during the immediate attack, other costs might continue to accrue months or years after the data breach. Without adequate cybersecurity and cyber insurance, many small businesses must close their doors permanently.

The increased incidence of ransomware attacks has prompted insurance companies to take a hard look at their liability exposure. For example, in one recent calendar year the FBI reported that the Internet Crime Complaint Center received 791,790 complaints, “with reported financial losses of $4.2 billion. Of these, 2,474 were identified as ransomware complaints with adjusted losses of more than $29 million.” As a result, insurance carriers have cut back on coverage of ransomware attacks and have set pay-out limits to control their liability. Also, while the coverage limits shrink, cyber insurance premium costs continue to rise.

Q: How does cyber insurance cover ransomware and other attacks?

A: Cyber insurance offers peace of mind by minimizing the financial impact of cyberattacks. It provides businesses with access to resources like forensic experts, legal advice and crisis management teams, which can help reduce recovery time and protect the business’s reputation.

Many small to midsized companies cannot withstand a ransomware attack, and cyber insurance costs are daunting. However, robust cyber threat protection, including ransomware protection, can reduce the chance of a ransomware attack and many other data breaches. Cybersecurity requires 360-degree infrastructure, including constant monitoring and scanning of your system. It also requires staying current with up-to-date system software and other essential updates. Often, those updates include important security fixes addressed by the developers. However, built-in factory default security is no longer sufficient. Hiring IT professionals to analyze your system, evaluate your cyber risks and recommend ways to lock down your network and its devices is a great way to minimize or eliminate the cost of cyber insurance.

Strong cybersecurity incident procedures in response to a ransomware attack should include:

• Analysis of the Ransomware Event – Early detection mitigates or eliminates consequences
• Isolation and Containment of the Attack – Quarantining can effectively reduce the severity of attacks
• Eradication of the Ransomware – IT professionals can help ensure your system is clear of active threats
• Identify and Reinforce Cyber Vulnerabilities – IT experts can provide cyber risk analyses to prevent future attacks
• Recovery and Restoration of Lost Data – Your data is your business. If recovery is not possible, having clean, regular backups can preserve your hard-earned business data
• Development of Company-wide Cybersecurity Best Practices – Your network is only as strong as its “weakest link.” Therefore, from the top down, all employee users must be on the same page about how to help protect your company’s network
• Determination of Client Exposure – The repercussions of any cyberattack can continue long after the cybercrime has been stopped. As a result, high-compliance businesses such as medical practices and law firms must be particularly careful with protecting their clients’ private information
• Incorporation of Event Experience into Better Future Protection – If SMBs don’t learn from being hacked, they will likely be the target of other attacks in the future.

Q: How much does cyber insurance cost?

A: The cost of cyber insurance depends on factors like business size, industry and the level of coverage needed. Small businesses can expect to pay a few hundred to a few thousand dollars annually. However, the investment is often considered a worthwhile expense to protect against potentially devastating cyber risks.

What’s the Best Way to Protect Against Ransomware Hackers?

Cybersecurity firms that specialize in cyber threat protection, including ransomware prevention, can provide your small business with layers of security, making it more difficult for hackers to access your network. Therefore, your company’s network and data will be safer. Hiring IT consultants will also reduce the cost of cyber insurance.

Reach out if you need support from a small business cybersecurity expert and learn more about ransomware hackers and getting affordable managed cybersecurity designed for small business clients.