Understanding Cyber Extortion Insurance Coverage

Cyber extortion insurance is a type of coverage that can help protect your business from the financial impact of a cyber attack. This can include ransomware, data breaches, and other types of cyber threats.

Ransomware attacks have increased significantly in recent years, with a 62% rise in 2020 alone. This highlights the growing need for businesses to have a robust cyber extortion insurance policy in place.

A cyber extortion insurance policy can provide coverage for the costs associated with a cyber attack, including the ransom payment, data recovery, and reputational damage. This can help minimize the financial impact on your business and get you back up and running quickly.

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Cyber extortion insurance is a type of coverage that helps protect businesses from the financial losses and expenses incurred from cyber incidents. It's a vital component of a comprehensive cyber insurance policy.

First-party coverage is a key aspect of cyber insurance, covering losses suffered by the business itself, such as income loss or digital asset loss. This can include business interruption, digital asset destruction, data retrieval, and system restoration.

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Third-party coverage, on the other hand, covers amounts that the business is legally obligated to pay to others, such as regulatory investigations, fines, and penalties, media liability, and PCI DSS assessment expenses.

Cyber insurance policies may also include coverage for errors and omissions—negligence or breach of contract, which encompasses legal defense costs or indemnification resulting from a lawsuit or dispute with customers.

Here are some common types of coverage found in cyber insurance policies:

These coverages can provide financial protection against a range of cyber-related risks, including network security and privacy liability, cyber extortion, and crime and social engineering.

Always-on threat protection is a crucial aspect of cyber extortion insurance. Our team of experts works around the clock to identify and alert brokers and businesses in real-time.

Corvus policyholders have access to Risk Prevention Services, a proven solution that reduces cyber risk by up to 20%. This service includes unlimited consultations with cyber experts and real-time intelligence on emerging threats.

Worth a look: Cyber Risk Report

Comprehensive Risk Assessment is a key component of optimal cyber protection. This involves evaluating an organization's security posture to identify vulnerabilities and areas for improvement.

Policyholders can also expect Precision Analytics, which helps to identify and prioritize security risks. This enables businesses to take targeted action to mitigate threats and prevent cyber breaches.

Incident Response is a critical aspect of cyber extortion insurance, providing a plan for responding to and containing cyber attacks. This includes access to expert advice and support to help businesses recover from a breach.

Corvus offers a Smart Cyber Insurance Appetite Guide, which provides a one-page overview of appetite and coverage. This resource helps businesses understand their cyber risk and identify the right level of coverage for their needs.

Cyber insurance premiums are calculated based on several factors, including an organization's IT security scan score and the quality of their cybersecurity controls.

Corvus considers an organization's revenue and nature of business when determining premiums, so it's essential to have a solid understanding of these aspects.

Annual cyber insurance premiums can start at around $2,000 and vary depending on the type and size of the business insured.

Insurers may raise premiums following a loss, but this depends on market conditions and can be mitigated by involving an insurance broker to explain the steps taken to remediate the risk.

Cyber insurance policies generally don't cover certain events and losses, and it's essential to know the exclusions in your policy to avoid unpleasant surprises.

Businesses must review their policy terms to understand what is not covered, as denied claims can be costly.

Cyber insurance policies may not cover unauthorized disclosure of confidential third-party information, such as trade secrets, designs, forecasts, methods, formulas, and records.

This means if a professor's research database is breached and the data are taken, insurance may not cover the cost of claims made against the institution and the professor by those whose information is violated.

A fresh viewpoint: What Does Cyber Insurance Not Cover

Data hosting, outsourced electronic processing, or data storage by a third party may not be covered, unless it's a computer system operated solely for the benefit of the insured under a written contract.

Cyber insurance policies may not cover personally identifiable information (PII) that is not subject to federal laws like the Family Educational Rights and Privacy Act (FERPA).

Unauthorized disclosure of personally identifiable information (PII) that is subject to federal laws like the Family Educational Rights and Privacy Act (FERPA) may be covered by cyber insurance policies.

Broaden your view: Cyber Insurance Data Breach

Cyber insurance premiums are calculated based on several factors, including an organization's score on a noninvasive IT security scan.

Corvus considers an organization's revenue and nature of business when calculating premiums. This means that larger organizations or those in high-risk industries may pay more for their cyber insurance.

The quality of an organization's cybersecurity controls is also a key factor in determining premiums. Organizations with robust controls in place may be eligible for lower premiums.

The limit requested by an organization also affects premium costs. If an organization wants to purchase a higher level of coverage, they can expect to pay more for their premium.

Here's a breakdown of the factors that affect cyber insurance premiums:

Cyber extortion insurance claims can be triggered by a range of incidents, including ransomware attacks, data breaches, and wire fraud.

To avoid denials, businesses should prioritize proper precautions, such as installing software updates and patches, implementing strong password policies, and training employees in security best practices.

A carrier may deny a cyber claim if a business failed to take these precautions, or if they made a claim exceeding coverage limits, incurred losses during the waiting period, submitted insufficient evidence, or filed the claim in an untimely way.

Here are some common reasons for cyber claim denials:

If you're a business owner, you need to know what types of cyber claims to report to your insurance provider. Ransomware attacks, which involve hackers locking up files or devices and demanding a ransom, are a common trigger for cyber insurance claims.

Data breaches, where confidential data is stolen or exposed, also require immediate reporting. This can happen due to human error or malicious actions by threat actors.

Wire fraud, where an employee is tricked into sending money to a scammer, is another claim you should report. This type of incident can be a costly mistake for your business.

System failures, which can be caused by outages that may or may not be malicious in nature, should also be reported to your insurance provider. These shutdowns can have a significant impact on your business operations.

Here are some common cyber claims to report:

Cyber claim denials can occur due to various reasons, and understanding these reasons can help you prepare and avoid them. One reason is if a business fails to take proper precautions, such as installing software updates and patches, implementing strong password policies, and training employees in security best practices.

In 2022, cyber insurance claims statistics showed that 27% of data breach claims had some exclusion written into the policy that meant cyber insurance was not paying out.

Businesses should be aware that cyber insurance generally stipulates a time deductible, which means carriers may deny claims stemming from short-term outages.

It's essential to have plans for weathering brief periods of business interruption. Proper documentation and evidence, such as incident reports, forensic analysis, and financial records, are also crucial to support a cyber claim.

If losses or expenses incurred exceed the coverage limits, the insurance company may deny the claim for the excess amount. Delays in reporting complicate the process and may result in a cyber claim denial.

Here are some key reasons carriers may deny cyber claims: