Cyber liability insurance covers the cost for a business to recover from a data breach, virus, or other cyberattack and covers legal claims resulting from the breach. Any business that stores sensitive data in the cloud or on an electronic device should have cyber liability insurance. Small businesses are most likely to need cyber liability insurance to respond effectively to a cyber breach, cover your costs, and continue with operations quickly.
The Ins and Outs
If your network or computer systems are hacked into or corrupted by a virus, for example, cyber liability insurance can be essential. Often, a general liability insurance policy or professional liability policy will contain basic cyber liability coverage. However, businesses that store personally identifiable information (PII) for employees or customers should certainly be equipped with cyber liability insurance. PII could be a name, date of birth, email address, social security number, credit card number, bank account number, or another piece of personal information.
There are various ways that a cyber breach can occur. For example, hackers can send phishing emails to customers in which they masquerade as your company. If a customer clicks on a link in the email, the hackers can steal PII. Or a hacker might use a virus or ransomware to corrupt your data files.
Protect yourself against cyberattacks with strong internal safeguards. Limit access to PII to a limited number of people in the organization and have strong passwords on electronic devices and to access different software tools. Regularly update your passwords and software.
Safety and security should be the first priority of any business. Technical and physical safeguards should be in place. Having an executive protection plan enables the business to call upon the insurer in their moment of need.
Unlike many other more traditional lines of insurance, there is no standard policy form for cyber insurance. Each executive protection plan will look unique.
Despite the variations, it is common for two types of coverage to be offered within a cyber liability policy:
This coverage pays for immediate expenses such as:
- Cost of notifying employees and the public
- Software/hardware damage repair
- Protecting the company’s reputation with a marketing and public relations response
- Business interruption costs and missed income while business operations are suspended
- Extortion money (used to appease a hacker who threatens your data or systems unless you pay them a ransom)
- Other supportive costs, such as paying for credit monitoring for customers
This coverage helps defend against lawsuits and legal claims. This includes:
- Privacy lawsuits claiming that you breached the privacy of customers or employees
- Fines from regulatory bodies
- Media liability claims, such as copyright infringement, libel, or slander.
- Breach of contract or negligence claims
How Much Coverage is Needed?
Essentially, you must work backward from a hypothetical cyber incident to determine how much coverage it would take to recover from the breach.
If your business experienced a breach, what measures would you need to take to inform your customers and protect their interests? How long would this take? Where do you store sensitive data? How much would it cost to replace any affected hardware or software? Do you have an in-house security team that can help you mitigate the damage, or would you need an outside consultant?
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.