Over the course of the past decade, many organizations have relied on standard property and liability coverage rather than a standalone cyber insurance policy to provide protection for cyber incidents. In fact, a recent survey from the Insurance Information Institute found that over half (59%) of organizations don’t possess dedicated cyber coverage.
However, as digital threats continue to advance—contributing to a significant surge in both the cost and frequency of cyberattacks across industry lines—neglecting to purchase a standalone cyber insurance policy has become an increasingly high-risk practice. After all, organizations’ elevated cyber exposures have motivated the vast majority of traditional property and liability insurance carriers to revise their policy terms as it pertains to protection for such exposures.
Specifically, many standard insurance carriers have begun implementing additional policy restrictions and more stringent coverage conditions related to cyber incidents in an effort to prevent unexpected (and costly) underwriting losses. Some carriers have even updated their policy wording to explicitly exclude coverage for cyber-related losses altogether.
That being said, a growing number of organizations that aren’t equipped with standalone cyber policies are encountering coverage gaps within their commercial insurance programs. In the event of a cyberattack, these organizations would either receive only partial reimbursement for the resulting losses from their traditional property and liability insurance, or no assistance whatsoever. Especially in the midst of soaring cyberattack intensity, such a lack of coverage could lead to lasting financial hardships, delayed recovery capabilities and severe reputational damages.
With this in mind, it’s crucial for your organization to ensure a clear understanding of the extent of coverage that your standard property and liability insurance provides for cyber-related losses. If this coverage is insufficient for the degree of cyber exposures that your organization is facing, securing a standalone cyber policy might be necessary to maintain adequate protection.
In any case, remember that every organization’s cyber risks are different. Be sure to consult a trusted and experienced insurance professional to determine your organization’s unique cyber exposures and subsequent coverage needs. For further guidance and insurance solutions, schedule a complimentary Cyber Insurance consultation with JGS today!