Cyber insurance

An insurance policy that helps cover the costs of cyber incidents, such as breach response, data recovery, business interruption, legal advice and third-party claims.

Cyber insurance may pay for forensic investigators, legal counsel, notifying affected people, restoring systems, lost income while operations are down and, in some cases, liability claims from clients. Policies vary widely, so the details of what is covered, excluded and capped matter a great deal.

Insurers have become more careful about who they cover. Applications commonly ask whether you use multi-factor authentication, maintain secure backups, apply security updates and run endpoint detection. Answering inaccurately can put a claim at risk. Many policies also require you to use the insurer's approved response firms and to notify them quickly when an incident occurs.

Practical tip: involve your IT provider when completing the insurance application so your answers match what is actually in place. Keep the insurer's incident hotline in your incident response plan, and read the policy for exclusions such as social engineering fraud, which is sometimes covered only by a separate endorsement or with a lower limit.