Cyber insurance is a specialized insurance policy designed to protect businesses and individuals from financial losses caused by cyber incidents, such as data breaches, ransomware attacks, business interruptions, and legal liabilities. As cyber threats continue to rise, cyber insurance helps mitigate the financial and operational impact of cyberattacks by covering expenses related to data recovery, legal fees, regulatory fines, and customer notification costs.

One common reason businesses invest in cyber insurance is to ensure financial protection against ransomware attacks, where hackers encrypt critical data and demand a ransom for its release. In such cases, cyber insurance can cover ransom payments (if applicable), forensic investigations, and system restoration, minimizing disruption and financial damage. Policies vary based on coverage, but many also include third-party liability, protecting organizations from legal consequences if customer or partner data is compromised.

With cyber risks evolving, cyber insurance has become an essential part of a comprehensive cybersecurity strategy, complementing proactive security measures like encryption, network monitoring, and employee training to reduce exposure to digital threats.