Debunking Cyber Insurance Myths: Protect Against Cyber Risks

In today’s interconnected world, cyber threats continue to evolve at breakneck speed, leaving businesses, both large and small, grappling to keep up. As an insurance agent, you’re at the forefront of protecting your clients from these risks, helping them navigate a complex digital landscape. Yet, despite the rising tide of cyber threats, many businesses still hold misconceptions about cyber insurance, leaving themselves dangerously exposed.

Let’s clear up some of the most persistent myths about cyber insurance and highlight how it provides essential protection against the increasingly sophisticated world of cybercrime.

Myth 1: “Our Data Isn’t at Risk Because It’s Stored Offsite”

One of the most common misunderstandings is that companies believe they aren’t liable for their data if it’s stored offsite, in the cloud, or with a third-party provider. Many business owners assume that the third-party vendor is entirely responsible for securing that data. However, that’s far from the truth.

Even when businesses rely on third parties to store their data, they are still often held accountable for its protection. It’s similar to hiring a general contractor—you may not do the work yourself, but you’re responsible if things go wrong. The same applies to data security. Businesses are often responsible for breach notification, regulatory compliance, and the financial implications of a data breach, regardless of where the data is stored.

This is where cyber insurance steps in. A well-structured cyber policy can cover the costs of breach notifications, data recovery, and even first-party expenses associated with compromised data. Whether data is housed in your own servers or through a third party, the responsibility for ensuring its security lies with the business, and cyber insurance is an essential safeguard in this process.

Myth 2: “We’re Too Small to Be Targeted”

Many small business owners still believe that cybercriminals only go after large corporations, leaving smaller enterprises untouched. Unfortunately, the reality is quite the opposite. Small businesses are prime targets precisely because cybercriminals view them as having fewer defenses.

Cyberattacks have grown highly sophisticated. They no longer require a “hacker in a hoodie” working out of a basement. Today’s cybercriminals use advanced techniques to infiltrate networks, and small businesses are often viewed as low-hanging fruit. Even seemingly niche sectors, like auto dealerships, have been victimized. For example, a ransomware attack on CDK, a popular software provider for auto dealers, led to widespread downtime and financial losses for small businesses that had once believed they were too insignificant to be targets.

For small businesses, a cyberattack can be catastrophic, potentially resulting in lost revenue, damaged reputation, and even closure. Cyber insurance that includes business interruption coverage ensures that companies can quickly recover and continue operations following an attack, no matter their size.

Myth 3: “Cyber Insurance Only Covers Liability”

A common misconception is that cyber insurance is purely about liability—covering the cost of lawsuits, settlements, and legal fees if a company is sued after a breach. While liability is an important component of cyber insurance, it’s just one piece of the puzzle.

In reality, most of the value of a robust cyber insurance policy comes from its first-party coverages, which kick in during the immediate aftermath of an attack. These coverages often include breach response, forensics, and business interruption, providing businesses with the tools they need to address the incident quickly and minimize operational disruptions.

Unlike traditional liability policies, which generally require a third party to be harmed before coverage applies, a comprehensive cyber policy offers protection even if no third party is affected. First-party coverages are critical for ensuring that businesses can recover from a cyber incident without facing financial ruin.

Myth 4: “Our Crime Policies Will Protect Us”

Another dangerous assumption is that a standard business crime policy will cover losses associated with cyberattacks. While crime policies are excellent for internal threats such as employee theft or fraud, they don’t offer the protection needed against external threats like ransomware or business email compromise (BEC).

Cyberattacks today often involve sophisticated tactics such as phishing, invoice manipulation, and ransomware, all of which fall outside the scope of a typical crime policy. For instance, if a company falls victim to a BEC scam, where fraudulent invoices are paid out to cybercriminals, a crime policy would likely not cover the losses.

Cyber insurance, on the other hand, is specifically designed to address these external risks. It provides coverage for things like ransom payments, incident response costs, legal fees, and public relations efforts to manage reputational damage. In an era where cybercrime is rampant, relying solely on a crime policy is a significant gamble.

Myth 5: “Our IT Department Has It Covered”

Some business owners mistakenly believe that having a robust IT department or using advanced cybersecurity tools is enough to protect against cyber threats. While IT teams play a crucial role in protecting a company’s digital infrastructure, they aren’t a silver bullet.

Cyber insurance does more than just provide financial protection after an incident—it also serves as a proactive partner in preventing attacks. Many cyber policies offer additional services such as incident response planning, cybersecurity training, and even dark web monitoring. These tools are designed to work alongside IT teams, offering extra layers of protection and early detection of vulnerabilities.

Some insurers provide continuous security assessments, scanning a company’s external network for weaknesses and offering recommendations for improvement. By taking a proactive approach to cybersecurity, businesses can prevent attacks before they happen, making cyber insurance a smart investment even for companies with strong IT departments.

Debunking Cyber Myths: A Necessary Step Toward Protection

In the fast-moving world of cyber threats, businesses can’t afford to rely on outdated beliefs and misconceptions about cyber risks. Understanding the realities of cyber insurance is essential for making informed decisions that safeguard your operations, clients, and bottom line.

At DOXA, we encourage insurance professionals to be proactive in educating their clients about the value of comprehensive cyber insurance coverage. Whether it’s protecting data stored offsite, safeguarding small businesses, or providing essential first-party coverage, cyber insurance plays a vital role in the modern risk management landscape.

With cyberattacks growing in complexity and frequency, businesses must rethink their approach to cybersecurity. Don’t wait until it’s too late—contact DOXA today to learn more about how our cyber insurance solutions can help protect your clients against the next big cyber threat. Together, we can ensure that businesses of all sizes are prepared for the digital future.