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CYBER LIABILITY INSURANCE
Cyber Liability Insurance helps cover the costs and damages resulting from cyber-related claims. You should consider it if:
Your company stores any customer's Personally Identifiable Information
HIPAA, HITECH, GLBA, or other federal/state data breach notification laws apply to your business
Your business relies on an online reputation
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REDUCE YOUR RISK
As technology grows in importance for your business, so do the risks involved. Ask your agent how you can help protect your clients and your business.

 

Why Do I Need Cyber Insurance?

If you manage or collect your customer’s personal information, then you already know that state and federal laws regarding the loss, theft, or possible compromise of personal data can create a costly obligation. The size of your potential loss is correlated to the number of customers you have in your system.

Cyber breaches continue to be a concern for business owners as the sophistication and reliance on Internet technology increases faster than ever before.  Not only do you have to consider internal risks such as a malcontent or negligent employee, but also bad actors that may attempt to take advantage of security flaws in your network; hardware; software; or honest, but unaware employees. According to Ponemon’s 2014 benchmark study, the average cost for each lost or stolen record containing sensitive and confidential information increased from $188 in the previous year to $201. In a cybersecurity insurance workshop, The Department of Homeland Security (DHS) identified at least 3 ways to prepare for cyber risks:

  • 1.   Risk Acceptance: An example would be setting aside an amount equal to an expected cyber liability event.
  • 2.   Risk mitigation: Using many recommended and tested security practices; companies can prevent or at least lessen the cost posed by cyber liabilities.
  • 3.  Transfer of Risk: A cyber insurance policy can help transfer all or some of your technology-related risks to an insurer.

 

What Risks Are Covered By Cyber Liability Insurance?

A cyber insurance policy is generally a package of coverage that includes protection for multiple risks. Ask your insurance professional about any liability coverage below:

  • Data Breach Liability
    Protection from damages suffered by your clients due to unintended release of private information
  • Security Breach Liability
    Protection from damages suffered by your clients due to network security failures
  • Regulatory Defense Expense
    Assists businesses lower the cost of complying with state and/or federal laws regarding breach notifications
  • Data Breach Expense
    Helps pay for potential third-party costs related to identifying and preventing breaches.
  • Cyber Extortion Threat Expense
    Covers the expense of paying extortions to unlock your data or website.
  • Reputational Damage
    Find assistance fixing your relationship with clients who may worry about working with your business in the future due to security issues.

 

Potential Cyber Liability Insurance Requirements

Many insurers will request certain practices are implemented to ensure cyber risks are decreased for both your business and the insurer. Insurers may ask your business to implement the following:

  • Designate a Chief Security Officer to oversee the firms cybersecurity.
  • Implement a cybersecurity policy (Get a free FCC cybersecurity policy planner for small business)
  • Apply a firewall to your network and control remote access through VPN
  • Install anti-virus on all of your firm’s machines
  • Use intrusion detection software to prevent unauthorized access

 

Exclusions

Cyber Insurance generally does not cover systemic risks. Exclusions include widespread hardware/ software issues and acts of war. For instance, security events like the Y2K bug of 1999 and any act of cyber warfare between nations. Other exclusions will apply and you should check your policy to see which risks are not covered.

 

Related Products

  IT Consultant's Insurance
  Technology Small Business Insurance

 

Related Articles

  Data Breach Insurance For Small Business
  Why Buy Cyber Crime Insurance?
  Professional Liability For Small Business
  ...More Business Insurance Articles

 

Sources:

Ponemon. 2014 Cost of Data Breach Study: United States.

Symantic. Internet Security Threat Report 2014.

U.S. Department of Homeland Security. Cybersecurity Insurance Workshop Readout Report.

 

This page is intended for informational purposes only. Your unique circumstance is NOT necessarily represented by the facts, data, opinions, or scenarios discussed above. Any action by you is done so at your own risk. Please consult an insurance professional for actionable transfer of risk advice. Please consult an IT security professional for actionable risk mitigation advice. 

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