Cyber Liability Insurance
What is it
Cyber Liability Insurance helps businesses survive data breaches and cyber-attacks by paying for recovery expenses. When cybercriminals infiltrate a network, hold data hostage, or acquire sensitive data, the company they steal from can be held liable for the incident. That's where Cyber Insurance comes in. It can often pay for customer notification, credit monitoring, legal fees, and fines after a business experiences a breach.
why do i need it
Cyber-attacks and hacking have become a big business, and nobody that uses their computer online is safe. More and more businesses are purchasing cyber liability insurance due to increased incidents involving the hacking of business computers to gain access to the personal information of clients. A Cyber Insurance policy can cover your business for loss of business profits due to a system outage that is caused by a non-physical peril such as a virus or attack. In addition to that it gives you liability coverage for losses where your liable for losing or compromising your third-party data.
Who needs it
Four reasons why you need cyber liability coverage for your business
- Your business uses computers to operate your business
- Your business processes, handles and stores personal data for customers.
- Your business utilizes web-based cloud services
- The financial impact of a cyber-attack could be financially devastating.
Cyber liability policies typically include various property and crime coverages. They also cover certain costs, such as notification expenses. First-party coverages are often subject to a deductible.
- Loss or Damage to Electronic Data - Many policies cover losses caused by damage, theft, disruption or corruption of your electronic data. They also cover damage or theft of data stored on your computer system that belongs to someone else. For a loss to be covered, it must result from a covered peril such as a hacker attack, a virus, or a denial of service attack. The policy generally covers the costs to restore or recover lost data. It may also cover the cost of outside experts or consultants you hire to preserve or reconstruct your data.
- Loss of Income or Extra Expenses - Many policies cover income you lose and extra expenses you incur to avoid or minimize a shutdown of your business after your computer system fails due to a covered peril. The perils covered may be the same as those covered under Damage to Electronic Data. The loss of income and extra expense coverages afforded under a cyber liability policy differ from those provided under your commercial property policy. Cyber policies cover income losses and extra expenses that result from an interruption of your computer system by a covered peril. Property policies cover income losses and extra expenses that result from an interruption in your business operations caused by physical damage to covered property, which does not include electronic data.
- Cyber Extortion Losses - Cyber extortion coverage applies when a hacker or a cyber thief breaks into your computer system and threatens to commit a nefarious act. For instance, a hacker may threaten to damage your data, introduce a virus, or shut down your computer system unless you pay them money. The perpetrator may also subject your computer system to a Denial of Service attack or threaten to release confidential data unless you pay the sum demanded. Extortion coverage typically applies to expenses you incur (with the insurer's consent) to respond to an extortion demand, as well as the money you pay the extortionist.
- Notification Costs - Policies may cover the cost of notifying parties affected by the data breach by government statutes or regulations. They may also include the cost of hiring an attorney to assess your firm's obligations under applicable laws and regulations. Some policies cover the cost of providing credit monitoring services for those affected by the breach. Some also cover the cost of setting up and operating a call center.
- Damage to Your Reputation - A data breach can severely damage your firm's reputation. Thus, some policies cover the costs you incur for marketing and public relations to protect your company’s reputation following a data breach. This coverage may be referred to as Crisis Management.
- Third-Party Liability Coverages - Most cyber policies include more than one type of liability coverage. These coverages apply to damages or settlements that result from covered claims. They also cover the cost of defending you against such claims. Note that defense costs may reduce the limit of insurance. Virtually all cyber liability policies are claims-made. Some third-party coverages may be subject to retention.
- Network Security Liability - Network security liability insurance covers lawsuits against you due to a data breach or to the inability of others to access data on your computer system. Coverage may apply if the data breach or inability to access your system is due to a Denial of Service attack, a virus, malware or unauthorized access and use of your system by a hacker or rogue employee. Policies may cover lawsuits alleging that you failed to adequately protect data belonging to customers, clients, employees or other parties.
- Network Privacy Liability - Network privacy liability insurance covers lawsuits based on allegations that you failed to properly protect sensitive data stored on your computer system. The data may belong to customers, clients and other parties. Some policies cover liability arising from the release of private data (such as social security numbers) belonging to your employees.
- Electronic Media Liability - Electronic media liability insurance covers lawsuits against you for acts like libel, slander, defamation, copyright infringement, invasion of privacy or domain name infringement. Generally, these acts are covered only if they result from your publication of electronic data on the Internet.
- Errors and Omissions Liability - Some cyber liability policies include coverage for errors or omissions that arise out of professional services the insured provides. For example, a policy purchased by a software developer covers claims arising out of coding mistakes and other errors or omissions that arise out of the company's software services. Likewise, a policy purchased by an architect covers claims alleging design flaws, faulty drawings, and other errors.
Does my cyber insurance policy cover me for a data breach?
Cyber liability insurance provides coverage for lawsuits arising from data breaches and server attacks. These lawsuits are not covered under a standard commercial liability policy. Electronic data is not tangible property, therefore the damage caused is not considered property damage. The cyber policy will cover damage to data which includes damage or corruption of data.
Does my cyber policy give me coverage for ransomware?
Yes, the Cyber extortion coverage will cover a ransomware attack. This is when a cyber-criminal will encrypt a victim’s files or threatens the release of sensitive data unless a ransom is paid. Cyber extortion coverage covers the costs of consultants and monies, including cryptocurrencies, for threats related to interrupting systems and releasing private information.
Does a Cyber policy cover theft of data by an employee?
Crime policies cover theft of money and securities by employees of an insured. However, they do not either cover, or underinsure, the theft of intellectual property or of identity. A Cyber insurance policy includes these important exposures due to the rogue employee risk every business faces.