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Ransomware Insurance in Texas

Ransomware insurance transfers the cost of a ransom payment to an insurer in the event of a ransomware assault. Considering the recent massive cyber attacks on networks happening worldwide, the risk of ransomware cyber-attacks in Texas is also increasing.

If you have been trying to figure out how to avoid ransomware, or just wondering: “Is there insurance for ransomware?”, this article is for you. But first, let’s understand what exactly we are trying to protect ourselves from. We will look at what ransomware is and how it can be dealt with through insurance:

What is Ransomware?

A ransomware attack is a type of cyber extortion or cybercrime. It is a type of malicious software that infiltrates a computer and locks it down or hinders users from using it until a ransom is paid to unlock it.  The payment of a ransom is where it gets its name. Hackers have developed many variants of this category of malware, but they all function similarly by holding a system or data hostage until the user pays the hijackers to have it released. Any device with a computer system could be a target: desktops, laptops, smartphones, tablets, etc.

How Does Ransomware Work?

Ransomware works by encrypting your personal information on your computer. It posts an alert that your system is locked or your files are encrypted. It further states that the owner will have no access or that the files will be leaked out to the public unless a ransom is paid. Hackers often demand payment in virtual currency such as Bitcoin. The virtual currency option gives the hackers anonymity as the financial institutions will have difficulty tracking the flow of payments to them. There have been repeated attacks on computer systems and networks of government agencies and private companies alike in the last several years. Statistics have also shown that ransomware is on the rise in Texas, both in terms of occurrence and the amount required to pay as a ransom.

How Does Ransomware Spread?

In Texas, phishing seems to be one of the most popular routes for inserting ransomware into the systems of unsuspecting victims. Phishing occurs through emails that mimic reputable companies as being the source. The message usually induces readers to release personal information such as passwords or credit card numbers. Frequently, these emails arrive with malicious extensions that can access private information stored on your device when they are opened.

Other methods of ransomware infiltration can be through:

  • Drive-by downloading: When a user visits an infected website and clicks on unknown links, malware gets downloaded and installed without the user’s knowledge.
  • Web-based instant messaging applications on social media can be a source of Crypto-ransomware. An example of this is a notification that pops up on your computer screen that says you qualified for some prize or special offer. Any interaction with it can result in you being locked out of your device.
  • Vulnerable web servers: Vulnerability refers to systems not secured by the necessary firewall or antivirus software protection. Malware could spread through the organization’s network, by gaining an entry point into these unsecured servers.

Ransomware has a unique way of instilling panic into the victims. For one, the knowledge that someone else might have access to all personal information is disconcerting. Also, the impact of the loss of access to personal information is more far-reaching than it seems. There is the risk of:

  • Permanent loss of sensitive information. Imagine losing all your computer files - what would you do if your computer got locked for ransom right now?
  • Loss of money. Without personal cyber insurance, you are stuck paying out of pocket to free up your network from ransomware.
  • Loss of equipment. If you cannot afford to pay for ransomware removal, your hijacked computer equipment becomes no longer usable, so you might have to dispose of it and purchase a replacement.
  • Possible injury to a company’s reputation by leaking out the information to the public. No business wants the liability of losing confidential data in a computer breach, so cyber business insurance is usually a must for any serious business venture.
  • Disturbance to basic operations. No matter how you look at it, if ransomware infects your system, it will take money and time away from your daily life to deal with this issue.

How to Prevent Ransomware Attacks?

Having ransomware prevention is by far better than having to deal with ransomware removal. Therefore, it is important to understand how to avoid a ransomware attack.

Multiple organizations and methodologies work in concert to secure computers and networks from cybercrimes of this sort. The United States Computer Emergency Readiness Team (US-CERT) constantly updates the public about the ways to protect their computer systems. US-CERT is a subsidiary of the Cybersecurity and Infrastructure Security Agency, an operational component of the Department of Homeland Security. US-CERT analyzes and controls cyber threats and exposures, disseminates cyber threat alerts to the public, and coordinates incident response activities. The majority of these preventive measures require the user to take precautions while connected to the internet. Here are some of them:

  • Have a data backup and retrieval plan for all critical information. Conduct regular backups examination to reduce the impact of information loss and to accelerate the recovery process. It is important to separate backup drives from the network to protect them from attack so they are not affected by the cybercrime event.
  • Make sure your operating systems and software are up-to-date with the latest versions. The latest versions usually arrive with updated built-in security. It means that obsolete versions of computer software make the system more vulnerable to cyber infiltration.
  • Always use the latest version of antivirus software to protect your computer systems. Current versions usually have ransomware detection systems built into them. This antivirus function may cost extra, but it is far cheaper than the cost of dealing with the aftermath of a ransomware assault. Also, make it a point to scan all internet-downloaded software before launching them. Use the permissions selection to restrict the installation and launching of undesirable software applications. For the highest degree of protection, it is best to apply the strictest permissions to all networks, systems, and services.
  • Do not enable macros that may come with electronic mail attachments. If macros are enabled, the embedded code may execute the malware if a user opens the email. In the same vein, stay away from unrequested network links in emails from unconfirmed sources.
  • Persons or organizations should resist the pressure to pay a ransom. In most cases, payment does not guarantee the release of the files. Besides, research has shown that victims of earlier cyber attacks who pay a ransom are potential targets for a second attack. It is not hard to see why: hackers share their successes and pass on information about their targets. According to the Federal Bureau of Investigation (FBI), more complex software such as Cryptolocker, or Cryptowall may require the payment in full before data is released.

Are Cyber Insurance and Ransomware Insurance The Same?

No, they are not, but they are related. Cyber insurance in Texas is the blanket term for all coverage for cyber attacks. On the other hand, ransomware insurance is specific to the risk transfer arising from a ransomware attack. Ransomware insurance is a subset of cyber insurance. Cyber insurance policies may or may not cover all elements of ransomware attacks. The level of coverage depends on how much premium the ransomware policyholder is willing to pay for it and the exclusions from the policy.

Cyber security insurance is also similar to Cyber and Privacy Insurance designed to provide coverage for consumers of tech services or products. Coverage of Cyber and Privacy insurance includes Liability and Property losses that may occur while engaging in electronic processes such as data collection and other types of transactions on the internet. Specifically, cyber liability insurance and privacy policies cover liabilities of a business for a breach in data as it pertains to personal information. By this definition, ransomware insurance is a part of the overarching topic of cybersecurity insurance.

Considering the potential damage from a single attack, it is best to speak to your trusted P&C insurance agent licensed in Texas, with a question: Is ransomware insurance included in my insurance package?

Note: Cyber insurance should not be confused with Technology Errors and Omissions insurance (Tech E&O), which provides coverage if a tech product and service fails.

For more information about the Tech E&O and to obtain a quote - contact a trusted commercial insurance agent licensed to work in Texas.

How Does Ransomware Insurance Work in Texas?

Ransomware insurance in Texas operates by covering losses associated with ransomware under cyber and privacy insurance policies based on an insuring agreement. Ransomware insurance may be a stand-alone policy or part of a cyber extortion coverage of a cyber security policy. Coverage can be written as private or commercial. An effective ransomware insurance policy covers the losses incurred due to an insurable event, such as infiltration of the system with the ransomware demand. The computer systems and data involved must be included in the current and paid-up policy for there to be coverage. In ransomware insurance, a business entity gets to transfer the risk of cyber attacks of this sort to an insurer by purchasing a cyber security insurance policy. The majority of cyber insurance policies sold in Texas cover ransom payments, extortion-related expenses, and the cost of computer and network repairs, as long as the insured agrees to duly report the incident to the insurer before taking any steps.

An example of how ransomware policy would work in a real-world scenario is:

What Does Ransomware Insurance Cover in Texas?

Effective ransomware insurance should cover all losses incurred because of an event. Some of the losses or incurred expenses include:

  • Money to pay for ransom when demanded. The cost of ransom payments is rising; therefore, coverage should bear the monetary expense of paying to restore all data and operations.
  • Cost of paying professionals to negotiate with hackers. Just as is the case with real-life hostage cases, there are skillsets for negotiating the victim out of the crisis. It is especially important when hackers threaten to leak out sensitive information to the public. Hiring these professionals costs money, so the insurance covers that.
  • Cost of forensic studies and recommendations. Whether or not data is restored, it is important to understand how and why it happened. Cyber security forensic specialists walk through the system to fish out the loopholes through which the attack was launched, seal them, and provide recommendations on forestalling further occurrences.
  • Business income losses incurred due to the shut down of activities after the ransomware attack. The policyholder must prove that the losses suffered are a direct cause of the ransomware.

Like every other insurance policy, coverage depends on how much premium the policyholder pays. In the event of a loss, the insurer covers the losses incurred to the purchased policy limit.

What Is Not Covered By Ransomware Insurance in Texas?

There are exclusions to ransomware insurance coverage in Texas. Here are the main ones:

  • Loss of value arising from intellectual property theft. Such loss of value is recovered as damages in a civil court of law in the state.
  • Loss of property under commercial property insurance for personnel training and education. Coverage does not cover the training of staff in the prevention of subsequent cyber-attacks.

As ransomware insurance available in Texas is going through the changes, your best source of information is a knowledgeable Texas-licensed P&C insurance agent, who understands the current market and knows how to deliver value to their customers.

Does Cyber Insurance Pay Ransomware In Texas?

It depends on the coverage of your Cyber insurance policy. Most cyber security insurance policies available in Texas cover ransomware as a matter of cyber security, but only to a limit, as stated in the insuring agreement. Cyber security insurance policyholders may also have ransomware coverage if it is included in their policy.

Stand-alone ransomware insurance policies focus only on ransomware exposure, so when looking to buy personal ransomware insurance, you might be able to have it included in the cyber insurance policy package. The process is the same for a private business cyber insurance policy. If you are unsure of what your existing insurance policy covers, speak to your insurance agent of record or contact any other Texas-licensed P&C agent to go over and explain your coverage to you.

With the recent surge in ransomware attacks, the worldwide insurance market has seen a decrease of insurers willing to insure businesses for cyber and ransomware policies. The industry is slowly but surely adjusting to the new realities of life. So, do not be surprised if several insurers turn you down, before finding an insurance company willing to underwrite your risks.

Do Small Businesses Need Cyber Insurance?

Yes, they do. They are often the prime target of cyberattacks because they tend to spend less on internet security, not being able to afford the robust security structure of government data systems. Because of this, hackers may infiltrate such systems more easily. For this reason, the Texas Ransomware Insurance is usually a component of Commercial Insurance Policy (Business Coverage) in Texas. It is incorporated as part of liability and property coverage in the insurance agreement of most commercial insurance policyholders in the state.

Recently, there has been the development of cyber security insurance policy products for the sole aim of managing the losses that may be incurred in the event of cybercrime. Again, ransomware cyber insurance policy is a part of the policy, being a cyber issue. If your current cyber insurance policy lacks sufficient ransomware coverage, you could ask your insurer about including the needed parts in the endorsements section.

How To Find Ransomware Cyber Coverage in Texas?

If you are asking yourself: “Where Do I Get Ransom Cyber Insurance?”, you should contact a Property & Casualty (P&C) insurance agent licensed in Texas, who has a wide range of ransomware and cyber liability insurers that they can quote and sell.

With the recent increase in cyber and ransomware attacks on individuals and businesses of all sizes, it has become much harder to find insurers willing to insure against this type of threat. Due to this, it is advisable to bind the coverage as soon as you find it, at least for a short term. This gives you a window of opportunity to seek better coverage in the meantime.

The worst thing you can do is not have protection when needed, especially with private data. If the private data is exposed resulting in a liability claim against a business, the business would use its liability insurance coverage to cover this exposure.

How Much is Ransomware Insurance in Texas?

The price for ransomware insurance in Texas is not fixed. It primarily depends on:

  • The quantity or extent of computer systems and data to be insured. The more equipment you are trying to insure, the more this coverage will cost.
  • The level of exposure to the risk. If you or your company store public information, you have a higher probability of being attacked. This also reflects in the price of the coverage.

When applying for cyber liability or ransomware coverage, be ready to answer insurers’ various questions about your existing security measures. Here are the types of topics the insurer might ask you about while trying to assess your risk exposures:

Company’s data backups and risk mitigation policies:

  • Where is the data stored (Online, Offline, Cloud, etc.)?
  • How is the data stored? Is it encrypted? If it is encrypted, what kind of encryption is being used?
  • How often are the backups tested for restoration?

Computer security protocols employed in the company:

  • Does the company provide computer security training to its employees?
  • Does your company pre-screen attachments and links for malicious content in emails?
  • Are employees able to access work email through non-corporate devices?

Usage of additional internal security measures, such as:

  • Endpoint protection products (EPP)
  • Multi-Factor Authentication (MFA)

The cost of ransomware and cyber insurance is different for each customer, but everyone should expect a significant increase in the pricing of these plans now and in the foreseeable future. In early 2021, ransomware and liability coverage in Texas could be found for an average $1,500-$5,000 per year. But with a rapid increase in ransomware claims, by 2022 a lot of insurers have either raised their prices significantly or halted the issuance of policies altogether, until the market fully understands the risk. By 2025, global cybercrime damage costs are expected to reach a $10.5 trillion figure. This means that the insurers must be ready to absorb this amount of claims, which are paid for mostly with the collected premiums from the insured. If the cost of insurance goes up - the premiums go up.

How Can I Save Money on Ransomware and Cyber Liability Insurance Coverage?

In recent years, you could purchase policies that included multiple levels of coverage as a blanket statement for all policies. But as the ransomware and cyber insurance industry go through rapid changes, expect to see insurance contracts with extensive Inclusion and Exclusion areas in response to the increased risk. This allows for an a-la-carte selection of only the needed coverages and rejection of all non-applicable ones. Pay only for the coverages you need. Save money by rejecting the unnecessary ones.

To get a quote for ransomware insurance and to get a detailed explanation of the coverages, contact a trusted insurance agent licensed to sell Property & Casualty insurance in the state of Texas.

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