Is There an Excess on Cyber Insurance?

Cyber insurance is a late addition to many insurance providers’ offerings. But do you have to pay an excess when you claim, as with other types of insurance?

Generally speaking, no. Excesses do not apply to the vast majority of cyber insurance policies, but you would have to check your own policy carefully or talk to your insurer to make sure.

Cyber insurance is still a relatively new field, and so many common insurance practices have yet to be applied in a workable way to this new kind of policy. It’s always best to know exactly what you may need to pay before you make a claim.

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

• Does cyber insurance have an excess?
• Can I lower my cyber insurance premium?
• What is an excess, and why do I need to pay it?

If you need a cyber insurance policy, or need help understanding what yours does and does not cover, give us a call today. Our team of cyber insurance experts will be happy to help.

What is an excess?

In insurance terminology, excess is the amount you pay towards a claim before your insurance provider makes its contribution. For example if your excess is €250 and you make a claim for €1,000, your insurer will pay out €750.

Think of it as the cost of making a claim. Your excess goes towards the running costs of the insurance company, its profits, and the costs of processing your claim.

There are two types of excess, compulsory and voluntary. Compulsory is a flat fee which is set by your insurance provider. Not every policy will have a compulsory excess, but some of them may.

Agreeing a voluntary excess is an option with many insurance providers. This means you may pay a lower monthly or annual premium, or receive some other benefit, in exchange for paying a higher excess when you claim.

Increasing your excess may save you money on your premium. But you don’t want to be landed with an excess if the worst happens and you can’t afford to pay.

Cyber insurance and excess

Your cyber insurance policy may or may not have an excess, and the amounts of those excesses may vary. It pays to get an insurance broker such as OCI.ie to find the very best deal to suit your needs.

Whether you want an excess or not, and how much you are willing to pay, typically depends on your level of risk. In short: how confident are you that you won’t need to make a claim?

After all, you may be able to save on monthly premiums by negotiating a higher excess with your insurance provider. You may want to do this if you assume your risk is very low – for example, if your company deals with hardly any data online. However, if your business is hit by a cyber attack, you will end up saddled with a bigger excess than you would otherwise expect to pay.

This consideration is called an “exposure”. For companies with large exposures (i.e. a greater exposure to risk), such as cloud storage organisations, it may be better to pay a higher monthly premium and keep costs low if or when a cyber attack occurs.

The bottom line

There are many options when it comes to getting a cyber insurance policy. Every business handles different data in different ways, although one thing nearly every organisation – big or small – has in common, is that nowadays they always store some kind of digital data.

From employee records to electronic payment processors, names and addresses to emails and credit card numbers, the risks associated with leaking confidential information online are quite large.

For this reason, it’s vital to make sure your business has adequate cyber insurance, and that you stike the right balance between premium price and excess. Talk to one of our advisers today, and we’ll be able to find the perfect cyber insurance policy for you.