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Frequently asked questions about cyber insurance

Cyber insurance has become one of the most essential forms of protection for businesses across New Zealand. As the demand for this type of coverage continues to rise, we’ve collated some of the most frequently asked questions.

Cyber Insurance Requirements and Coverages

What are the basic requirements for cyber insurance?

Cyber insurance is designed to protect businesses from digital threats and cybercrimes, which are becoming increasingly prevalent. Basic requirements often include having a secure and updated IT infrastructure, proper employee training against cyber threats, and strong data management practices. However, the specifics may vary based on the insurance provider.

What does cyber insurance cover?

Cyber insurance primarily provides financial support to manage the fallout from a cybercrime. This typically includes costs related to data recovery, legal expenses, public relations efforts, notification and credit monitoring services for affected customers, and business interruption costs. Additionally, some policies also cover the costs of cyber extortion or ransomware attacks.

What doesn’t cyber insurance cover?

While the coverage of cyber insurance is extensive, certain areas are typically by not covered by cyber insurance. These often include the costs associated with improving the IT system post-incident, loss of future revenue due to reputational damage, and losses incurred from unencrypted devices.

Are there different types of cyber insurance?

Yes, there are primarily two types of cyber insurance – first-party and third-party coverage. First-party coverage pertains to direct losses to your business, while third-party coverage relates to the claims and legal action taken by others impacted by a breach in your business.

Cyber insurance in New Zealand

What is unique about cyber insurance in New Zealand?

The regulatory environment in New Zealand places a strong emphasis on privacy and data protection, making cyber insurance crucial. The Privacy Act 2020, for example, mandates businesses to notify the affected individuals and the Privacy Commissioner in case of a privacy breach, thereby increasing potential costs of a breach.

Does every business in NZ need cyber insurance?

While it’s not a legal requirement, considering the rise in cyber threats and data breach incidents, having cyber insurance could be essential for businesses of all sizes. It’s particularly crucial for those handling sensitive customer data or relying heavily on IT systems.

Is cyber insurance expensive in New Zealand?

The cost of cyber insurance is typically $40 – $80 per month however this can vary greatly depending on the nature of your business, the type of data you handle, your current cybersecurity measures, and the coverage you choose. 

 

How to buy cyber insurance with Gerrards

At Gerrards, we streamline the process of purchasing cyber insurance, providing you with quotes from top insurers in 24 hours or less. We assist you in understanding coverage limits and finding the best fit for your business, ensuring a smooth experience.

How long does it take to buy cyber insurance through Gerrards?

We pride ourselves on efficiency. With Gerrards, you can expect to receive multiple quotes from top insurers in 24 hours or less.

What about the cyber insurance certificate?

Once your policy is in place, we’ll send a digital certificate of insurance, confirming the details of your cover. This certificate serves as proof of your insurance and details the extent of your coverage.

What industries can Gerrards offer coverage for?

We’re flexible and cater to businesses across all industries. Regardless of whether you’re in retail, IT, healthcare, or any other sector, we’re equipped to serve your cyber insurance needs.

How much cyber insurance do I need?

This varies based on your business’s size, the nature of data you handle, and your risk profile. Our team at Gerrards is always ready to guide you through this process and help you make an informed decision.

Cyber insurance claims

How do I make a cyber insurance claim?

At Gerrards, we handle the hard work for you. If you need to make a claim, you can contact us, and we’ll liaise with the insurance company on your behalf, advocating for you throughout the process.

What are some common cyber claims?

Meet ABC Retail, a bustling online retail store in New Zealand. One day, an unpatched server vulnerability led to a data breach, exposing thousands of customers’ credit card information. As a result, ABC Retail faced potential legal actions from customers and hefty fines from regulatory bodies. Thankfully, they had cyber insurance with Gerrards, which helped cover the costs of notifying affected customers, providing credit monitoring services, legal defense, and fines.

Imagine XYZ Manufacturing, a leading industrial manufacturer. A sophisticated ransomware attack encrypted all their critical files, halting production lines, and demanding a substantial ransom to restore access. Time was of the essence, and the losses were mounting by the hour. With Gerrards’ cyber insurance, XYZ Manufacturing was able to engage a team of cybersecurity experts to negotiate with the attackers and restore their systems, all covered by their policy.

Let’s take the case of DEF Logistics, a thriving logistics company. An employee received an email from someone posing as the company’s CEO, urgently requesting a wire transfer to a new vendor. Without verification and trusting the apparent urgency, the employee transferred a significant sum. Upon realizing it was a fraudulent request, panic set in. Thankfully, Gerrards’ cyber insurance policy covered funds transfer fraud, helping DEF Logistics recover the lost funds and implement better verification procedures.

Consider GHI Healthcare, a renowned healthcare provider. A staff member received a call from someone claiming to be from their IT department, stating they were performing routine system checks and needed access credentials. Unwittingly, the staff member complied, providing sensitive information that led to unauthorized access to patient records. The incident became a massive blow to GHI Healthcare’s reputation. Cyber insurance was there to provide support, covering public relations costs, legal fees, and helping them invest in better employee training to prevent future incidents.

Is cyber insurance worth is?

Deciding whether cyber insurance is worth it for your business is a significant decision. Here is a detailed list of pros and cons to help you weigh your options:

Pros

  1. Financial Protection: Cyber insurance helps cover expenses related to a cyber incident, such as data recovery, legal fees, notification costs, and fines, protecting your business from potentially crippling financial losses.

  2. Business Continuity: In the event of a significant cyber attack, cyber insurance can support your business in recovering and maintaining operations, reducing the potential downtime.

  3. Access to Experts: Many cyber insurance policies provide access to cybersecurity experts, legal professionals, and public relations specialists who can help you manage a cyber incident effectively.

  4. Compliance and Reputation Management: If your business must comply with regulations around data privacy, cyber insurance can aid in fulfilling those requirements. It can also help manage the public relations fallout from a breach, preserving your reputation.

  5. Customizable Coverage: Cyber insurance can be tailored to fit the specific needs and risks of your business, providing targeted protection where you need it most.

Cons

  1. Cost: Premiums for cyber insurance can be substantial, particularly for small businesses. The expense must be weighed against the potential benefits and risks specific to your industry and operations.

  2. Not a Substitute for Cybersecurity Measures: Having cyber insurance doesn’t negate the need for robust cybersecurity measures. In some cases, failure to maintain adequate security protocols may affect the validity of a claim.

  3. Coverage Limitations: Depending on the policy, there may be limitations or exclusions on what is covered. For example, losses from unencrypted devices or improvement costs to the IT system post-incident may not be covered.

  4. Potential Complexity: Understanding and selecting the right cyber insurance policy can be complex. Without proper guidance, businesses may end up with a policy that doesn’t fully align with their needs.

  5. False Sense of Security: Having a policy might lead some businesses to become complacent about their cybersecurity practices. Cyber insurance should complement, not replace, a comprehensive cyber risk management strategy.

Cyber insurance policy changes

What happens if I need to change my insurance later?

At Gerrards, we understand that businesses evolve, and with that, so do their risks. You can adjust your policy to meet your changing needs. We’re here to make that transition seamless.

What happens if I cancel my cyber policy?

Cancelling your policy leaves your business exposed to cyber threats. While you may save on premium costs, the potential financial and reputational damage from a cyber-incident can be far more costly.

How does cyber insurance compare with other policies? 

While business interruption insurance covers losses resulting from disruptions to business operations (like natural disasters), it typically doesn’t cover disruptions due to cyber events. That’s where cyber insurance comes in, filling the gap to cover cyber-related disruptions.

There’s no difference between these two. Both terms refer to the same kind of insurance that covers businesses for liability and financial losses resulting from cyber events and security breaches.

Professional indemnity insurance protects your business against claims for damages from clients, due to problems with your work or advice. It doesn’t cover cyber-related incidents, which are the domain of cyber insurance.

Do you have further questions about cyber insurance NZ?

We hope this guide has shed light on the intricacies of cyber insurance in New Zealand. However, we understand that every business is unique, and you might still have questions specific to your situation. At Gerrards Insurance Brokers, we’re here to help. If you have any further queries about cyber insurance, or any other insurance need, please don’t hesitate to contact us. Our team of experienced professionals is always ready to provide personalised advice and solutions tailored to your business. 

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