Cyber insurance

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Page written by Chris Godfrey. Last reviewed on April 24, 2024. Next review due April 6, 2025.

It costs UK businesses an average of £21,000 to remedy the impact of a cyber attack and 81% of organisations who suffer cybercrime are SMEs. The sad fact is, businesses are increasingly vulnerable to systems lock outs, data theft, malware, ransomware and many other types of digital crime. To protect themselves against these threats, many UK organisations now rely on cyber insurance – a special type of cover that can help businesses recover if digital bandits ever come knocking at their door.

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What is cyber insurance?

Cyber insurance is a type of business insurance that provides financial support if your business is harmed by cyber attack or security failure. Although cyber insurance cannot prevent these type of events from happening, it can help your organisation recover sooner and cover the third-party costs you may incur if a cyber attack puts your stored data at risk of illegal use or exposure.

Who needs cyber insurance?

From a single laptop to acres of data servers and information systems, nearly all UK businesses use some form of digital technology. Very often these systems are crucial to keep an organisation running, which means losing them, even for a short period of time, can be a calamity for the business. To make things worse, in many cases, important data is often stolen and repurposed by criminals to rob other businesses and individuals of cash and proprietary information – events that can significantly increase the total costs of an attack.

What it boils down to is this – cyber risk is everywhere, and few businesses are immune. Every SME, sole trader, or self-employed person that uses digital technology needs cyber insurance protection.

What does cyber insurance cover?

In the event of a security breach, illegal threat or cyber attack, cyber insurance will cover the first-party and third-party financial and reputational costs if data or electronic systems have been lost, damaged, stolen or corrupted.

Depending on the type of policy you buy, cyber insurance protection can include:

Investigating a cybercrime
Recovering or replacing data lost in a security breach
Restoring damaged or compromised computer systems
Reputation management
Ransom payments demanded by hackers
Notification costs, in the case you are required to notify all affected third parties
Loss of income if a cyber attack causes your business to close temporarily
Third party claims for damages incurred because of a cyber attack or security failure
Legal costs to defend your business against claims caused by a data breach
Costs of defending against privacy investigations by the Government or a regulator
Defamation claims should a hacker alter your online presence.

Common types of cybercrime:

Cybercrime is becoming increasingly sophisticated, with criminals and mischief-makers using a variety of broad and targeted techniques to steal, destroy, or hamper the technologies and information that millions of UK businesses rely on. Common types of cybercrime include:

Malware

Malware is malicious software that is illegally inserted into your computer(s) and networks. If allowed to run, malware can:

Cause a device to become locked or unusable
Steal, delete, encrypt, or alter stored and system data
Take control of your devices to attack other organisations or individuals
Obtain credentials that give access to other devices, services or systems that your business uses
‘Mine’ cryptocurrency illegally and at your cost
Use services that may cost your business money – such as premium rate phone services

Ransomware

Ransomware is a type of malware that prevents you from accessing your computer(s) and the data stored on them. It can also lock you out of your organisation’s networks and deliberately spread to other systems as a virus. Usually, the criminal responsible for placing this type of malware will demand a cash payment to release the lock they have secured. However, even if you pay the ransom, there is no guarantee that the lock will be undone. In some cases, the ransomware will deliberately destroy your stored data whether you pay or not – this is known as ‘wiper ware’.

Hacking

Hacking is the unauthorised use of or access to your computer(s) and digital networks. Criminals typically gain access by exploiting system vulnerabilities or tricking individuals into giving them passwords and security keys. Once they have bypassed your security measures, hackers can steal, alter and incapacitate your data and networks. In most cases this is done for financial gain but in some instances it is simply done as an act of cyber vandalism. Either way, the impact on your business can be catastrophic.

How much does cyber insurance cost?

Premiums for cyber insurance can start at less than £26 per month, but the price you pay will depend on the size of your business, the level of risk attached to what you do, your business’ potential exposure to cyber-crime, the amount of cover you choose and the limit of your policy excess.

How much cyber insurance coverage do I need?

The level of cover you need depends on the way your business uses digital technology and the sensitivity of the data you use and store. For example, if your organisation stores third party personally identifiable information, financial data, or health information, your risk exposure is very high. A security breach that exposes this type of sensitive information to criminals can cost businesses millions of pounds in recovery costs, compensation claims, data privacy investigation, and the necessary upgrades to security systems.

Even if your business does not store highly sensitive data, the risks and costs can still be extreme. For example, what would your business do if you were suddenly locked out of your accounting, logistics and production data systems? Could you still operate?

Many UK small businesses purchase a cyber insurance policy with a £1million per occurrence limit and a policy excess of £1,000, but if you’re not sure how much cover you need, please contact us to discuss your needs with a cyber insurance expert.

How to get a cyber insurance policy

Cyber insurance is available from insurers and brokers. During the application process you’ll be asked about your business and cyber security practices. These include questions that are common to all types of insurance, such as your business turnover, customers, and insurance claims history. You will also be asked questions that are specific to cyber insurance, such as your cyber security policies, your use of encryption, where your data is stored, how many of your employees have access to sensitive data, etc.

Keep in mind that just as no two businesses are identical, so no two cyber insurance policies are the same. Every organisation needs a policy that’s tailored to their operations, which means cover, costs, and terms and conditions can vary significantly. It therefore makes sense to shop around and compare different policies from different insurers before making any purchase.

How Swoop can help

All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let hackers, snoops and cyber vandals wreck the business you’ve worked hard to build. Contact Swoop today to compare top-quality cyber insurance from different providers and to discuss all your business insurance needs.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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