As a business owner, you’re likely well aware of the importance of business insurance and workers’ compensation but protecting your company doesn’t end with these things. Cybersecurity insurance, commonly referred to as cyber insurance, is another essential tool every business should have in its arsenal. If you’re not familiar with cyber insurance, here’s a basic overview of what you should know.

What Is Cyber Insurance?

Cyber insurance offers protection against losses resulting from cyberattacks and data breaches. These insurance plans provide coverage for lost income as well as costs like legal fees associated with data exposure. This form of insurance is intended to be used alongside cybersecurity technology.

What Businesses Should Have Cyber Insurance?

In the modern era, cyber insurance is a necessity for the vast majority of businesses. According to Forbes, 88% of small business owners feel that they are vulnerable to cyberattacks. Your company most likely stores data online in some form, and, security breaches can be especially disastrous if that data is leaked. The more devices and apps your business uses, the higher the risk of unauthorized access becomes. Investing in a solid cyber insurance plan is vital to the safety of your business and the people who interact with it on a day-to-day basis.

What Is Not Covered Under Cyber Insurance?

While cyber insurance can enable businesses to recoup many losses, there are some forms of damage it does not traditionally cover. Hardware damage, such as computers that cease to function properly, will typically need to be addressed by a separate commercial property insurance policy. Cyber insurance will also not cover preventative measures to avoid future cyberattacks.

Can Cyber Insurance Replace Cybersecurity?

While cyber insurance offers many benefits, it should not be viewed as a substitute for cybersecurity. Insurance mitigates the damage caused by cyberattacks, but it doesn’t prevent them from occurring. Managing risks with top-of-the-line cyber defense technology is vital.