Cyber liability insurance covers financial losses that result from data breaches and other cyber events. Most cyber insurance policies include both first-party and third-party coverages.
First-party protection covers losses your company has as result of the breach. Third-party coverages apply to claims against your business by people or companies that have been injured as a result of your actions or failure to act.
It is rare to find a business not currently vulnerable to being impacted by a cyber breach.
Your business probably uses computers to send, receive, or store electronic date of some sort. This is information owned by your company such as tax records, sales projections, or other important information. If this data is damaged, lost or stolen, it can have a huge negative impact on your business and be very costly to replace.
Your computer system probably also contains sensitive data that belongs to other people or companies such as customers, employees, or vendors. If the data is lost or compromised by a hacker, the owners might go after your company for damages.
If this should occur, you are then responsible for informing all third parties compromised. This comes with a substantial cost to your business.
You can protect your business against the costs associated with data breaches by purchasing a cyber liability policy.
Here are examples of first-party coverages you are likely to find in a cyber liability policy:
- Loss or Damage to Electronic Data – Covers the cost to replace or fix electronic data or programs that were damaged, destroyed or stolen in a data breach.
- Loss of Income and Extra Expenses – Income losses you have as a result of the lost or damaged data and the expenses incrued to fix the problem.
- Cyber Extortion – If a hacker should get into your computer system and threatens to damage your data, give your system a virus, or release sensitive information if you do not provide them with money or something else of value to them, you will be covered.
- Notification Costs – Covers the cost of notifying parties (voluntarily or as required by law) affected by a data breach. Damage to Your Reputation – Some policies cover costs you incur for marketing and public relations to protect your company’s reputation following a data breach.
Third-party claims are claims made against your business with regard to a data breach.
- Network Security and Privacy Liability – This covers claims against your firm for negligent acts, errors or omissions, unauthorized access, introduction of a virus, or other security breaches. This also includes claims stating you failed to protect sensitive data stored on your system. The data may belong to customers, clients, employees or other parties.
- Electronic Media Liability – This protects you against lawsuits for acts like slander or defamation, copyright infringement, invasion of privacy or domain name infringement.
- Regulatory Proceedings – Includes coverage for fines or penalties imposed on your business by regulatory agencies that oversee data breach laws. Also covers the cost of hiring an attorney to assist in your response to a regulatory proceeding.