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Cyber insurance

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Cyber insurance

Cyber insurance also known as cyber liability insurance coverage is a type of policy designed to protect businesses and individual users from internet-based risks. Understanding cyber risk is crucial as it encompasses the need for comprehensive coverage to address various aspects of cyber risk, including rapid response to cyberattacks and risk assessment. In simple terms, it’s a safety net for businesses against the potential financial losses resulting from cyber incidents, such as data breaches, network damage, and business interruption caused by cyber threats.

Why is cyber insurance important?

In our increasingly digital world, cyber threats are evolving rapidly, highlighting the importance of identifying and effectively managing cyber risks through cyber insurance. The significance of cyber insurance lies in its ability to mitigate the risks associated with cybercrimes, including those cyber risks that businesses face daily. It provides financial support in case of a cyber event, enabling businesses to recover and get back on their feet quickly. Without it, a single cyber incident could cause significant financial damage and even jeopardize the survival of your business.

It’s crucial to have this cover if your business:

  • Deals with sensitive customer data
  • Rely heavily on digital systems
  • Makes payments
  • Offers online services

What are the cyber risks that can be covered?

Data Breach and Privacy Crisis Management

A significant part of cyber insurance is about managing data breaches. When a breach occurs, businesses may be responsible for costs related to notification, credit monitoring, forensic investigation, public relations, defence costs, regulatory fines and data recovery. Cyber insurance can cover these expenses, helping manage and mitigate the fallout of a data breach. Additionally, it also covers public relations expenses to manage reputation in the event of a cyber breach, highlighting the need for urgent action to address potential damage to the company's image and brand.

Business Interruption

Cyber attacks can lead to significant downtime, halting operations and resulting in loss of revenue. Business interruption coverage under a cyber policy can compensate for the loss of income during these interruptions, helping to to minimize financial consequences while their systems are being restored by it specialists.

Cyber Extortion

With the rise in ransomware attacks, where hackers lock businesses out of their own systems and demand ransom payments to release them, cyber extortion has become a significant concern. Cyber insurance policies can cover the cost of the ransom and the services of a professional negotiator to handle the situation.

Social Engineering

This is where the exploitation of human error results in a loss to the organization. For example if an fraudulent invoice is sent and the accounts team pay it then this would be a loss under social engineering. Almost every business has staff with access to credit card numbers, critical software and systems that keep your business operational. Even if you limit access, your staff are still susceptible to manipulation which can result in an attack or theft by a cyber criminal looking to exploit them. Cyber liability insurance does not include social engineering by default so check your policy wording to ensure you have it.

How much does cyber insurance cost in NZ?

Premiums are calculated on several different factors including:

  • Size of company
  • Types of security
  • Industry operating in
  • Claims history

Cyber insurance in NZ typically costs between $40 to $80 per month.

Who needs this policy?

While every business that uses digital systems or handles sensitive customer information could benefit from cyber insurance, it is particularly crucial for businesses in sectors such as finance, healthcare, retail, and any industry dealing with large volumes of personal data. It’s also important for businesses of all sizes, as small businesses are often targeted due to their typically less secure systems.

No, cyber insurance is not currently mandatory in New Zealand. However, it’s a crucial safeguard for businesses operating in the digital landscape and is highly recommended.

Yes, many cyber insurance policies will cover personal devices if they’re used for business purposes and are included in the policy. However, the specifics depend on your individual policy and insurer.

How do I get proof of cyber insurance?

You can usually get proof of insurance same day when you purchase business cyber insurance through Gerrards.

Acquiring this from traditional brokers may require a few weeks, a delay that could create problems for policyholders who need instant proof of cyber insurance for a contract. 

To obtain coverage promptly, contact us. We may require you to provide some fundamental details such as:

  • The legal name of your entity 
  • Types of security in place
  • Payment handling information 
  • Size of business 
  • Details of previous data breach or cyber attack incidents
  • Risk management strategies
Once you accept a quote we will issue you with a certificate.

What does cyber insurance not cover?

Lost value of intellectual property

It generally does not cover the cost associated with the loss in value of intellectual property due to a cyber attack.

Reputational harm

While some policies might offer limited coverage, the indirect cost of reputational harm, including lost business due to a decline in reputation after a breach, is usually not covered.

Physical damage

Cyber insurance policies typically do not cover physical damage to assets caused by cyber events.

Acts of war

Most insurance policies exclude acts of war, and cyber insurance is no exception. Cyber attacks by nation-states typically fall under this exclusion.

Other common questions

Insurers assess a number of factors, such as the size and type of the business, the electronic data handled by the company, the company’s cyber security posture, and the extent of the coverage required.

In the event of a cyber incident, policyholders must report the incident to their insurer as soon as possible. The insurer will then provide guidance on the next steps, which may involve engaging forensic experts, lawyers, and public relations professionals.

Yes, but it may influence the cost of your premium. You may also be required to demonstrate improvements to your cyber security measures since the breach.

Yes, like other types of insurance, policies usually include a deductible. The deductible is the amount that the policyholder is responsible for paying out of pocket before the coverage kicks in.

This depends on the specific policy. Some cyber insurance policies may cover business interruption and extra expenses related to third-party service provider outages.

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