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Healthcare organizations are among the most targeted industries for cyberattacks. From ransomware to phishing scams, criminals know that patient records are valuable and that smaller clinics often have limited IT resources to defend themselves. That’s why cyber insurance for healthcare has become an essential safeguard.
But cyber insurance isn’t a substitute for strong security practices, and not all insurance policies are created equal. For administrators at small to medium-sized healthcare facilities, understanding what cyber insurance covers, and what it doesn’t, can make the difference between a manageable incident and a business-ending crisis.
In this guide, we’ll highlight the key areas healthcare administrators should focus on when evaluating cyber insurance and strengthening their overall cybersecurity posture.
Healthcare data is uniquely attractive to cybercriminals. Social security numbers, insurance details, and medical histories can be sold on the dark web for far more than stolen credit card numbers. Attackers also know that downtime can disrupt patient care, making providers more likely to pay a ransom. Because of this, healthcare data breaches are on the rise. Here are a few points of interest.
Small medical practices face particularly high stakes when it comes to data breaches. In 2022, over half of all penalties issued by the Department of Health and Human Services (HHS) Office for Civil Rights (OCR) were assessed against these smaller providers. Beyond OCR fines, healthcare entities may also face additional penalties from state attorneys general and the Federal Trade Commission (FTC). For many small clinics, the combined weight of fines, patient trust erosion, and expensive recovery efforts can be crippling.
Before jumping into our recommendations for healthcare administrators, let’s get a better handle on what cyber insurance covers. Typically, cyber insurance policies include elements such as:
Understanding these basic attributes will help you formulate a more robust cyber insurance checklist to ensure you’re not left vulnerable.
Not all cyber insurance policies are designed with healthcare in mind. When evaluating coverage, administrators should pay attention to these essentials:
Ransomware remains the most common and devastating threat in healthcare. Make sure your policy covers both the ransom payment (if legally permissible) and the extensive recovery costs.
Healthcare facilities operate under the HIPAA Security Rule. Look for policies that include coverage for HIPAA fines, penalties, and defense costs, as these can quickly escalate after a breach.
Even a short system outage can disrupt patient care and billing. Ensure your policy includes business interruption coverage to offset lost revenue and keep operations afloat during recovery.
If a breach affects a partner, lab, or vendor, your organization could still be held responsible. Third-party liability coverage helps protect against lawsuits and claims tied to vendor-related incidents.
In addition to reviewing these key coverage areas, it’s essential for healthcare administrators to put together a thorough cyber insurance coverage checklist, utilize a specialized healthcare insurance broker, and consult with legal counsel. A lawyer can provide insights into the legal ramifications of the coverage and assist in understanding any contractual jargon. They can also offer advice on compliance issues that may arise, especially for healthcare organizations operating under strict regulatory guidelines.
While cyber insurance for healthcare entities provides financial protection, it doesn’t prevent attacks. Insurers are also becoming stricter about who qualifies for coverage. Many now require organizations to demonstrate basic cybersecurity for healthcare, such as:
Without these measures, healthcare organizations may find it difficult, or even impossible, to secure a policy.
Cyber threats to healthcare aren’t going away, but with the right mix of insurance coverage and proactive cybersecurity for healthcare, administrators can safeguard their organizations, protect patients, and maintain trust in their communities.
Ready to strengthen your organization’s cyber defenses? Contact us today to learn how our cybersecurity expertise and managed IT services for healthcare can help your facility stay secure and compliant.
This information is provided by Locknet for informational purposes only. All information is provided in good faith, and we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information included. Before acting based on any information or material contained herein, you should evaluate the appropriateness of these recommendations. If you need legal advice, please consult an attorney. If you need insurance advice, please consult a qualified agent.
