Cyber Insurance 101

Recently, we’ve been focusing on the activity surrounding cyber insurance: how rates are rising and why, and how to save some money by becoming good candidates. But as Julie Andrews said best, “Let’s start from the very beginning.”

What is cyber insurance?

While the ultimate goal is to shut down data breaches and other cyber threats before they happen, in the event of a successful cyberattack, you’d still be responsible for any sensitive information stolen. In its simplest definition, cyber insurance can cover financial losses sustained from a cyberattack and cover your liability for a data breach that involves customer information. Costs can include legal fees, notifying customers about the breach, and repairing or replacing computer systems.

Why cyber insurance?

As with all insurance, it’s meant to be one piece of your larger, risk-preventing puzzle. The average cost of a ransomware claim is $485,000. For most dealers, just the thought of facing that kind of situation is scary, and the possibility of facing it without coverage is even more terrifying! Yet, in 2023, 40 percent of companies purchased cyber insurance only after they had incurred a cyberattack. To qualify for the best coverage and pricing, your dealership will need to be a good candidate (more on how to do that, here). Since attacks are rising and techniques are getting more advanced, payouts are becoming larger and more frequent, causing the price to surge. So, taking action before an incident will save you money in the long run. Your policy will also provide you with legal support and a forensic investigation to help you in the event of a breach at your organization.

What are the most common insurance claims filed?

1. Phishing

No surprise here. This attack has held first place for three years in a row. While phishing is not the most damaging attack you can experience, it is the most successful. Be extra alert when receiving and clicking on emails that look like they’re from Amazon, Google, or Facebook.

2. Scams

Business email compromise (BEC)  has continued to grow every single year. BEC claims more than tripled between 2017 and 2021. The FBI called it a $43 billion scam. Ensure your email security is strong and don’t be fooled by email impersonations.

3. Malware

Malware and ransomware are another culprit that has seen major growth recently. From the billion-dollar big guys to the mom-and-pop stores, these culprits have evolved from targeting individuals to businesses of all sizes. These can be trojan viruses, spyware, adware, or ransomware. Be wary of email attachments, and the links you click while on work devices.

No, cyber insurance does not replace cybersecurity

Think of your policy as the beloved cherry topping on your many-layered compliance and security cheesecake. To have the best program possible, your dealership should have: a strong IT foundation, followed by an up-to-date, monitored cybersecurity program, clearly followed and maintained compliance standards, and cyber insurance. You can’t have one without the other. Every layer works with the others to make sure your dealership is as protected as it looks on paper. Both cybersecurity and cyber insurance are critical to the protection of your dealership.

Whether your dealership has 20 people or you are a group with 2,000, take a look at your current cybersecurity, compliance, and prevention and consider strengthening that combo with cyber insurance.