Cyber Liability Coverage
Cyber liability coverage provides protection for businesses against risks associated with the use of technology. Data breaches, hacking and other cyber security issues are becoming all the more common as our use of technology to run our businesses increases. This insurance can help you prepare for, respond to and recover from cyber-attacks.
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FAQs
What types of attacks can be covered?
There are two types of cyber liability coverage. First-party coverage helps cover expenses when your technology is breached or your data is stolen. Third-party coverage protects you when a client sues your business for failing to prevent a breach.
- Security, network and data breaches are incidents that result in unauthorized access to data, applications, networks, software or devices
- Social engineering protects against funds transfer fraud situations, like if one of your employees is tricked into sending money from the company’s bank account to a malicious hacker
- Phishing is a common scam that involves using fraudulent emails to access secure information like usernames and passwords
- Malware is a term used to describe any type of malicious software designed to harm devices, services or networks
- Ransomware is malware that uses encryption to hold a victim’s information at ransom
- Cyber extortion occurs when cybercriminals threaten to disable business operations or compromise its data unless they receive payment
What costs does cyber liability cover?
Cyber liability is a highly customizable type of insurance. Coverage can vary widely depending on the carrier and policy forms. What kind of coverage your business needs depends on the types of risk you have. Cyber liability can offer coverage for:
- Lost income due to a cyber event
- Notification expenses to alert affected customers of a data breach and the cost of credit monitoring services for those affected
- Costs to recover compromised or stolen data
- Regulatory fines from state and federal agencies
- Legal services to assist you in meeting regulations
- Costs to repair damaged technology systems
- Forensic investigations
- Extortion payments to help recover locked data
- Costs associated with investigating and fixing security flaws
- Litigation expenses related to customer and employee privacy and security
- The cost to hire a public relations firm
What doesn’t cyber liability cover?
As with all insurance policies, cyber and data breach liability coverage includes exclusions. Generally, these types of policies do not cover the following:
- The cost to improve your technology systems, like software upgrades after a cyberattack
- The loss of value of your intellectual property after theft
- The potential future lost profits you may incur after a cyber event
What types of businesses need cyber liability insurance?
Every type of business that uses technology in their daily operations, whether a global corporation or a mom and pop store, faces cyber risk. With the advancements in technology, the threats to your business assets become more complex. In particular, businesses that engage in the following practices should seriously consider cyber liability coverage:
- Businesses that collect, store, send or receive personally identifiable information
- Companies that store information and data on the cloud
- Industries that have rules about customer information
- Businesses that collect, store, send or receive personal health information
- Companies that handle credit card or bank account information
Why do I need cyber and data breach liability?
Cyberattacks aren’t just inconvenient, they can put you out of business. According to the National Cyber Security Alliance, 60% of small and midsized companies go out of business within six months of a cyberattack.
Such threats are both costly and time-consuming. A study performed by IBM and the Ponemon Institute concluded that the average cost of a data breach was $3.86 million and the average time to identify and contain a breach was 280 days.
Small businesses are particularly susceptible to cyber threats. Verizon’s Data Breach Investigations Report found that almost a third of all data breaches in 2020 involved small businesses but that only 16% believe they are at risk of an attack. Even worse, 43% of small businesses don’t have any type of cybersecurity defense plan in place.
What are some examples of cyberattacks and data breaches?
Cybercrime is a growing and profitable industry. Even with thoughtful security measures in place, disastrous cyberattacks and data breaches still occur. If one of the nation’s largest banks, a well-known entertainment network and the federal government couldn’t prevent cyberattacks, it makes sense to insure your business has the protection it needs.
In March of 2020, Marriott International disclosed that the personal information of nearly 5.2 million guests was stolen. The personal information included names, dates of birth, addresses, phone numbers and email addresses.
In July of 2020, a group of hackers accessed famous people’s Twitter accounts and requested bitcoin donations. They received approximately $121,000 of stolen bitcoin.
In April of 2021, hackers managed to breach Colonial Pipeline’s network by using a compromised username and password. The hackers held the network hostage and demanded cryptocurrency. In response Colonial shut down their entire gasoline pipe system, causing gas shortages and soaring fuel prices.
What does cyber liability cost?
There are many factors that can affect the cost of cyber and data breach liability insurance. Cost can depend on the number of clients and employees you have, your business revenue, your industry, and the type and amount of data you collect and store.
How do I prevent a cyberattack or data breach?
The key to combating cyber threats is prevention. Every business needs an organization-wide security strategy. Below are some items that can help you prevent a cyber incident.
- Strong password policies
- File integrity monitoring
- System for reporting suspicious activity
- Employee training that includes social engineering and phishing
- Firewalls
- Regular software updates
- VPNs
- Cybersecurity software
- Data encryption
- Third party authentication
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