Are Business Interruption Costs Covered by Cyber Insurance?

If your business falls prey to a cyber attack, it’s highly likely your trade will come to a complete halt. But is this covered by your cyber insurance?

No. Your cyber insurance policy will not cover your business interruption costs – these are covered under your combined business policy.

Cyber insurance is there to help you cover the costs associated with online attacks and data breaches. It can also help cover regulatory fines and fees.

In this article, we’ll cover the following questions:

• Do I have to stop trading after a data breach?
• Will cyber insurance cover business in the event I cannot trade?
• What does cyber insurance cover?

Interruptions to your business can turn out very expensive, so make sure you have the necessary precautions in place before you need them.

What are business interruption costs?

Business interruption is a type of insurance cover that is designed to protect businesses against the financial loss suffered when they have to cease trading as a result of an unforeseen event.

This kind of insurance can, in general, be complex to assess, but business interruption cover is very important as without it your business may not recover from a loss. Getting business interruption cover generally requires that you give your insurance provider a transparent understanding of your business and how it was operating before the interruption. All of our insurers are experienced in dealing with these issues and in supporting their customers through this process.

Many unforeseen events can necessitate a cease in trading, if only on a temporary basis. Certainly a cyber attack is one of them: you may need to take your IT systems offline while the holes in your security are patched. If you cannot process payments, you have no cash flow and you cannot pay suppliers, employees or investors.

Business interruption insurance is available from a wide range of providers, as part of your general business insurance. Check you have this important cover, and if you aren’t sure, call us today and we can help find out for you or add it to your policy.

Recovering from a cyber attack

Cyber insurance will cover what it costs to improve your computer system after a security breach, when cyber security professionals have suggested improvements to eliminate vulnerabilities. After a hole in your cyber security is compromised, it’s vital to patch it right away before it can be further exploited.

Let’s use the example of a business’ computer system that has become infected by ransomware. Forensic services, provided by your insurer, are able to contain the virus and determine that the source of the infiltration is a vulnerability of your computer system. After recommendation from the forensic provider, you purchase new software to improve your security: this is what your cyber insurance will pay for.

Cyber insurance and other costs

However, cyber insurance doesn’t only cover the upfront costs of hiring professionals and installing software. Another example of the importance of comprehensive cyber insurance can be illustrated by cyber extortion.

In this situation, a cyber attacker exploits your security to take control of your IT systems and hold them to ransom. This particularly dangerous kind of attack can potentially lead to vulnerable data, personal information and payment details being released.

The good news is, your Cyber policy will cover the costs to manage and mitigate the incident. There are professional cyber negotiators who are trained in these scenarios, and who will work to resolve the situation quickly and safely. If necessary, your cyber insurance will also cover payment of the ransom demand.

Of course, the relevant professionals will freeze all of your computer systems if possible while the negotiations take place. In this event, you will not be able to continue trading as normal. These business interruption costs, such as your wages and gross profit reduction, will be covered by your business interruption section on your commercial combined policy – not your cyber insurance.

Call us with any of your cyber insurance questions

For more information, contact us and talk to our cyber insurance experts today. We can help you find a suitable cyber insurance quote that will cover everything you need.