In today’s digital age, businesses face an increasing risk of cybercrimes. To protect from financial losses as a result of cyber attack, organizations often turn to insurance, specifically crime policies and cyber insurance. Understanding the nuances between these policies is crucial for businesses to ensure they have the broadest protection possible, so we’re breaking down our expertise for you.
Crime Insurance
Why: to protect against direct financial losses associated with criminal activities such as theft, fraud, and forgery
By Who: external actors or employees
How: provides reimbursement to mitigate financial risks
For What: from the direct impact of criminal acts
Cyber Insurance
Why: helps prepare for and mitigate risks from data breach, ransomware, or fraudulent funds transfer
By Who: external actors or employees
How: with services and financial support. Provides ongoing security monitoring to identify issues before attackers can. In the event of attack, provides incident response services to help get business back online ASAP.
For What: covers direct and indirect losses, including costs to restore operations (forensic investigation, data restoration, business interruption, cyber extortion, replacement of funds lost in fraudulent fund transfer) as well as liability to others (reimbursement for legal costs, breach notification costs, ongoing credit monitoring for breach victims)
The Overlap
While crime insurance and cyber insurance address different aspects of risk, there are instances where these policies overlap. Social engineering, a prevalent method used by cybercriminals, can trigger coverage under both types of insurance. For example, if a fraudulent email leads to a loss of funds through a social engineering scheme, it could potentially be covered by either crime insurance or cyber insurance, or both. Similarly, funds transfer fraud, where money or securities are transferred based on fraudulent instructions, can be covered by both policies.
For this reason, it is so important to work with an expert who understands the nuance of policy forms and the importance of comprehensive coverage. In a world where the line between physical and digital risks is increasingly blurred, businesses and their advisors, like eSpecialty, must understand the distinctions between crime insurance and cyber insurance. Have questions about your unique situation? Get in touch!