Cybersecurity Insurance for Nonprofits: Protecting Your Organization from Cyber Threats
As the world becomes more digital, nonprofits are facing a growing number of cyber threats. From data breaches to malware attacks, cybercriminals are targeting organizations of all sizes. Nonprofits are especially vulnerable because they often handle sensitive donor information and may not have the resources to recover quickly from a cyber attack. That’s why cybersecurity insurance has become so important.
In a recent Nonprofit Bytes podcast, Amy Eybsen, Managing Director at GHJ Advisors, and Lucy Busby, Commercial Insurance Broker at Apex Risk and Insurance Services, shared valuable insights on what nonprofits need to know about cybersecurity insurance. Let’s take a look at what they had to say about protecting your nonprofit.
Tune into the full episode, here.
Then, read on to learn more about cybersecurity insurance for nonprofits.
What is Cybersecurity Insurance?
Cybersecurity insurance is designed to help protect organizations in case they experience a cyber incident like a data breach or malware attack. It covers two main areas:
- First-Party Coverage:
This protects the nonprofit itself. If there’s a breach or cyber attack, this part of the policy can cover things like data recovery, fixing systems, and income lost due to downtime. It can also pay for legal fees if the breach leads to lawsuits. - Third-Party Coverage:
This part covers the nonprofit’s liability to others, such as clients, donors, or partners, if their data is affected by the breach. It can help cover things like legal fees, notification costs, and settlements if the nonprofit is found responsible.
As Lucy explains, “Cyber insurance is a safety net for organizations, including nonprofits, in case they experience a cyber incident, like a data breach or a malware attack.”
How is Nonprofit Cybersecurity Insurance Different?
A common question many nonprofits have is whether their cyber insurance should be different from for-profit companies. While the basic coverage is similar, nonprofits face unique risks that can make a tailored policy even more important.
For example, nonprofits often collect sensitive information from donors and clients. This data is valuable to cybercriminals, making nonprofits prime targets. Many nonprofits also operate with smaller budgets and may not have the financial means to recover quickly from a cyber attack. Because of these challenges, having the right insurance coverage is even more critical.
Lucy highlights this by saying, “Nonprofits may have fewer resources to recover from an attack, making the right cyber insurance policy even more crucial.”
Why Nonprofits Need Tailored Coverage
Cybersecurity insurance isn’t one-size-fits-all. Nonprofits need to make sure their insurance fits their specific needs and risks. Lucy specializes in helping nonprofits find the right coverage, and she warns that not all policies are created equal.
She points out, “A lot of the limits that used to be automatically included in a cyber policy are now either excluded or have been reduced. Brokers really need to review all quotes and renewal policies carefully.”
Nonprofits should also be aware of the types of risks they face, including:
- Funds Transfer Fraud:
Cybercriminals trick nonprofits into transferring money under false pretenses. This type of fraud is common in organizations that deal with large donations or grants. - Social Engineering:
This occurs when criminals manipulate people into giving away sensitive information. Nonprofits can fall victim to this kind of attack if staff members are tricked into sharing login credentials or transferring funds.
Lucy warns, “This is something that can be easily missed if there isn’t a thorough analysis of the policy or if the broker doesn’t know what specific coverages to look for.”
Cybersecurity Threats Are Always Evolving
Cybersecurity is a fast-moving field, and the threats nonprofits face are always changing. What was covered in your policy last year may not be covered this year. Some insurers are starting to reduce coverage limits or exclude certain types of threats altogether. That’s why it’s important to regularly review your insurance policy and stay up to date on the latest risks.
Lucy advises nonprofits to work closely with their brokers to ensure they’re getting the right coverage. “Brokers need to keep up with these changes and understand what’s necessary to fully protect their clients,” she says.
What Can Nonprofits Do to Stay Protected?
While having the right insurance is a key part of cybersecurity, nonprofits should also take steps to reduce their risks. Here are some tips to help keep your nonprofit safe:
- Conduct Regular Security Audits:
It’s important to regularly check your organization’s cybersecurity measures. This helps identify any weaknesses that could be exploited by hackers. - Train Your Team:
Make sure all employees are aware of cybersecurity best practices. Many breaches happen because someone clicks on a phishing email or uses a weak password. Proper training can help prevent this. - Use Strong Security Tools:
Keep your software up to date, use firewalls, and encrypt sensitive data. Strong cybersecurity measures can prevent many attacks before they happen. - Review Your Cyber Insurance Annually:
Cyber threats are constantly changing, so your insurance policy should too. Make sure to review your policy every year with your broker to ensure it’s still covering all the right risks.
Final Thoughts
Cybersecurity insurance is more important than ever for nonprofits. With the increasing threat of cyber attacks, having the right insurance coverage can make a huge difference in protecting your organization from financial damage. Make sure you understand the basics of first-party and third-party coverage and work with a broker who knows the unique needs of nonprofits. If it’s been a while since you reviewed your cybersecurity policy, now’s the time to take action.
For more insights on nonprofit cybersecurity and insurance, listen to the full Nonprofit Bytes episode, “What Nonprofits Need to Know About Cybersecurity Insurance.”
Have More Questions About Cyber Insurance?
Apex Risk & Insurance Services was specifically founded to fill the service and consultative gap left by agency consolidations in the insurance marketplace. These consolidations have left customers who are used to a boutique service approach with no personal connection to their team.
Apex brings the high-touch service proposition back to the San Diego business community, and beyondRead on to learn more about how to protect your business from ransomware.
