Cyber liability insurance covers the costs associated with a cyberattack or data breach of the affected business. Nearly half of all cyber attacks are committed against small businesses, according to Cybercrime Magazine. It is estimated that cybercrimes will cost the world an estimated $6 trillion annually by 2021. Cyber liability policy protects your business against the financial repercussions of stolen, lost or compromised data.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance policies vary based on the insurance company; however, most offer the same basic protections for businesses. You can expect your policy to provide first-party coverage, which covers immediate expenses that a business may face directly following a cyberattack. Coverage options typically include network security, privacy liability, network business interruption, media liability, and errors and omissions.
Cyber liability policy will also pay for third-party coverage, which provides coverage for legal claims and lawsuits relating to privacy lawsuits from customers or employees. It can also cover media liability claims, such as libel, copyright infringement and slander. Cyber liability policy may also cover fines from regulatory bodies, as well as breach of contract or negligence claims. Typically not covered by cyber liability insurance includes loss of property, social engineering, criminal activity and bodily injury claims. In addition, cyber insurance policies do not generally cover potential future lost profits and the cost to improve internal technology systems.
Who Needs Cyber Liability Insurance?
Any business that stores personally identifiable information (PII) for customers or employees requires cyber liability coverage. PII typically consists of any data which may be used to identify a certain individual, such as names, social security numbers, birth dates, email addresses, bank account numbers, and credit card numbers. Possession of any type of sensitive or private information puts your business at risk. Businesses that want to offset their financial risk in the event of a business disruption or data breach caused by a ransomware attack or even an internet infrastructure outage benefit from cyber liability insurance.
A cyberattack can have irreversible financial and reputational consequences. Cyber liability insurance acts as a safeguard for your business to minimize the side effects that can occur when private information is stolen. Implementing other security measures, such as setting strong passwords on electronic devices can also help keep sensitive data protected.
The Benefits of Cyber Liability Insurance
As cyberattacks become more common, it is imperative to protect against data loss. A single cyberattack can disrupt your business, resulting in possible lawsuits and lost income. Cyber liability insurance can protect against these risks while also providing other key benefits. One of the biggest benefits of cyber liability policies is the ability to recover financial losses through business interruption loss reimbursement. A cyber liability policy will reimburse for lost income or increased expenses to your operations; business interruption coverage generally covers lost net income, loan payments, employee payroll, taxes, and mortgage, rent, and lease payments.
If a cyber attack occurs, your business is at risk for lawsuits from employees and customers who may have been affected by the breach. Cyber liability policy generally covers penalties and fines imposed on your business by regulatory agencies that oversee security and data loss laws. Cyber liability policy also often covers forensic support and the cost to hire legal counsel in response to a regulatory proceeding. Identifying the source of an attack is essential to prevent further data loss. Many cyber liability policies will include reimbursement of investigation-related expenses.
Consult with Pro Insurance Group for More Information
As data breaches and other cyber crimes become more common, the need for cyber liability insurance has risen significantly. Cyberattacks can result in major fines, legal fees, and various other expenses. It is also important to remember that a cyberattack not only impacts your business financially, but can also negatively affect your reputation. Businesses should be aware of the risks and the various costs associated with a cyberattack or data breach. If a breach does occur, a cyber liability policy can cover gaps left by general liability insurance and support successful business operations. For more information about cyber liability insurance or to acquire a policy for your own business, reach out to the insurance professionals at Pro Insurance Group.