If you’re a tech founder looking for advice on cyber insurance, this article will be helpful. We’ll briefly discuss what cyber insurance for tech firms cover, why it’s critically important, and then dive into how much you should purchase.
What Does Cyber Insurance Cover?
Cyber insurance is designed to protect businesses from various threats and attacks from malicious hackers. This includes:
- Privacy breaches
- Hacking attacks
- Phishing attacks
- Malware infections
- Ransomware attacks
- Viruses
- Social engineering
- Wire transfer frauds
The policy responds to the financial damages you suffer directly (first-party damages), such as notification costs, business interruption costs from ransomware attacks, extortion payments, forensic, legal, and regulatory costs.
Additionally, it covers third-party damages, which include lawsuits from failing to protect sensitive data and media liability. Finally, the policy often includes cyber crime coverage for wire transfer frauds.
Why Is Cyber Insurance for Tech Firms Critically Important?
One of the key risk issues facing tech firms is the vast quantity of sensitive data they collect and store, making them attractive targets for hackers. This vulnerability necessitates robust cyber insurance coverage to mitigate potential financial and reputational damages.
How Much Cyber Insurance Is Enough for a Tech Company?
The amount of cyber insurance required depends on several factors:
- What your company does
- How much private data it holds
- Customer requirements in terms of limits
- Your comfort level
- Budget constraints
Most tech startups purchase $1 million in cyber coverage. However, we’re seeing that once a client lands a substantial contract, their customer often demands $5 million or more in cyber limits, which we can provide.
When shopping for cyber insurance for a new tech client, we often seek alternative quotes. We get the standard $1 million quote and also ask for $2 million and $3 million options.
Currently, the difference in premium between the $1 million and $3 million options is not significant, making the higher limits a potentially wise choice. The goal is to provide options for a comfort level that aligns with your risk tolerance.
Why More Protection Is Better
Cyber threats and risks are continuously evolving and growing. The potential for significant claims exists, and having more protection rather than less is a wise choice.
In my experience, clients never regret opting for higher coverage limits during a claim. Cyber incidents are more likely to occur than other types of claims, so higher limits provide peace of mind at a relatively low cost.
Conclusion
If you’re looking for help with your insurance buying decisions and want to work with an expert in the tech field, give me a call or drop me an email. I’d love to hear from you.
Thanks!
