An enterprise that promotes a social purpose, offers a public benefit, and has been granted tax-exempt status by the Internal Revenue Service (IRS) is known as a non-profit organisation. Generally speaking, contributions to non-profit organisations are tax deductible for both individuals and corporations making them. Additionally, the non-profit does not levy taxes on funds raised through fundraising efforts or on the donations that are received. Depending on the part of the tax code that allows them to exist, non-profit organisations are frequently referred to as NPOs or 501(c)(3) organisations.
The Internet and computers are essential components of daily life. As a result, the security concerns connected to their use are also. About 30,000 websites are hacked or subjected to cyber attacks every day, and 50% of non-profit organisations reported experiencing cyber attacks in the previous year alone, according to data.
Numerous non-profits have limited financial resources and often neglect to prioritize cyber-security measures, making them vulnerable to significant security breaches and data thefts. To safeguard against these risks, it is strongly recommended that non-profits obtain cyber liability insurance. This type of insurance provides coverage for financial losses resulting from cyber incidents such as data breaches and cyber-attacks.
Ransomware coverage for Non-profits –
A cyber attack in which a harmful actor introduces a particular kind of malware into the target systems is referred to as a ransomware attack. Once activated, the malware usually encrypts the data to prevent access. The victims are then notified by ransomware assaults that they need to pay a ransom to get access to their data again, or else the attackers threaten to delete the material, release it to the public, or increase the ransom amount. According to the No More Ransom Project, the FBI advises against paying ransoms since victims who do so are more likely to become targets again.
Insurance coverage are offered to cover damages resulting from breaches impacting the information owned by a non-profit organisation as well as losses affecting the information of third parties (donors, patients/clients, and others). Cyber insurance can cover a wide range of losses and expenses, such as the price of notifying everyone whose information may have been compromised, the cost of content repair (e.g., fixing a hacked website), and the cost of hiring a public relations expert to help your non-profit restore its reputation following a serious security breach. There are also insurance that cover business interruption in the uncommon event that a cyber security attack is so serious that it necessitates a temporary suspension of operations for the non-profit.
What is covered :- First party expenses, Incident response and forensics services, PR services to manage reputational damage caused by breach, notification to affected parties and other expenses involved indirectly responding to cyber incident. Third-party expenses like legal fees to defend lawsuits against the company and fines for violating HIPAA regulations. Cyber crime costs, an example is the theft of funds as a result of digital fraud.
What is not covered :- Upgrades– if you suffer data breach and decide to upgrade your system afterward to prevent future incidents, your policy may not cover the updates. Future profits – Cyber policies don’t usually cover potential future profits that may lost due to reputational damage caused by a breach, for example Deceased valuation – if a cyber criminals steals intellectual property and the theft results in decrease in the company’s valuation, cyber insurance policy may not cover the loss.
What is the price of cyber liability insurance?
Non-profits’ general cyber liability insurance premiums vary depending on the level of coverage. For general liability insurance, non-profit organisations typically pay a premium of roughly $45 per month, or $500 annually. Actual expenses could differ.
Options for Non-profits cyber insurance –
An important portion of the US economy is derived by non-profit organisations. According to the IRS, there were 1.48 million 501(c)(3) tax-exempt organisations among the 1.97 million NGOs that were active in the US in 2022.
1.Liability for Privacy Protection–
Organisations handling sensitive employee and consumer data must have privacy liability coverage. It assists in shielding the company from liability in the event of a data breach that exposes personal information.
Liabilities arising from breaches of privacy laws or cyber incidents involving private data are covered under this coverage. Third-party liability costs are frequently incurred by these events as a result of contractual duties or regulatory inquiries.
Certain plans, for instance, provide coverage for covering settlements following data breaches, cyber incidents, and consumer class-action lawsuits. Penalties, fines, and legal costs may be covered under privacy liability coverage if the organisation is the subject of a regulatory inquiry by law enforcement.
2.Network Safety–
An organisation that has network security coverage is shielded from incidents including ransomware, malware infections, data breaches, cyber extortion demands, and corporate email compromises.
It pays for first-party expenses that are directly related to a cyber incident and include things like IT forensics, legal fees, data restoration, payment for ransomware, consumer breach notification, public relations costs, call centre setup, credit monitoring, and identity restoration.
3.Disruption of Network Business–
Organisations confronting an operational cyber risk benefit from network business interruption coverage. It covers losses brought on by security lapses like a third-party hack as well as system malfunctions like human mistake or a malfunctioning software patch.
Organisations who depend on the network to function, for instance, can utilise this coverage to recover lost revenue, fixed expenses, and additional costs incurred while being impacted by the incident, in the event that an on-premises network or a provider’s network shuts down due to an incident.
4.Coverage for Errors and Omissions–
Errors and omissions (E&O) coverage can shield businesses from cyber incidents that make it more difficult to provide consumers with services and execute contractual commitments. It covers allegations of mistakes or poor performance in traditional professional services provided by physicians, solicitors or engineers, as well as services like software and consultancy.
In addition to providing defence costs for lawsuits or customer disputes, E&O coverage guards against claims of carelessness or contract violations.
5.Coverage of Media Liability–
With the exception of patent infringement, this coverage guards organisations against violation of intellectual property. It typically pertains to online and print advertising, as well as posts made by a company on social media.
The Top Cyber Insurance Companies in the USA-
- Tokio Marine HCC.
- AIG
- AmTrust
- AXA XL
- Beazley
- Chubb
- Crum & Forster
- Travelers