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What is Cyber Liability Insurance & What Does it Cover?

There is no denying that the risk of a data breach is very real. In fact, the World Economic Forum cited cyberattacks as one of the five biggest risks to global stability in 2019.

Also, according to Statista, 4.1 billion records were exposed in the first six months of last year. When you take this into consideration, it is not difficult to see why cybersecurity is something that all businesses need to be thinking about at the moment.

With that in mind, we’re going to take an in-depth look at cyber liability insurance so that you can get a better understanding of what it covers and how it can benefit your business.

What is Cyber Liability Insurance and Who Needs it?

Cyber liability insurance helps your business to respond should you be the victim of a data breach or a cyberattack.

If your computer systems or network have been hacked into or one of your employees has accidentally opened a virus, for instance, cyber liability insurance can make a monumental difference.

This is something that all businesses can benefit from, as no company is immune to the threat of a data breach.

What Does Cyber Liability Insurance Cover?

There are several different issues that are covered by cyber liability insurance. This includes the following:

Network Security

Most companies will require network security coverage, including those subject to privacy and information risk. This type of cyber insurance will ensure your business is covered should you experience any failure within the security of your network.

This does not only include data breaches but also business email compromise, ransomware, cyber extortion demands, malware infections, and data breaches. By having this coverage in place, you will be covered for any of the expenses that are directly related to the network security incident.

This includes credit monitoring and identity restoration, public relations expertise, setting up a call center to deal with the issue, notifying your customers of the breach, restoring data, negotiation and payment of the ransomware demand, IT forensics, and legal costs.

Omissions and Errors

If a cyber event has stopped you from delivering services to your consumers and fulfilling the obligations of your contract, you could be covered if this is included in your cyber liability policy.

Errors and omissions will cover any claim that comes about because of a failure to deliver your services or mistakes made regarding the performance of your company.

This can cover a huge scope of services. For example, you have the more conventional services, such as engineers, doctors, and lawyers. You also have technology services that can be impacted as a consequence of a breach, like consulting and software.

With omissions and errors, allegations of contract breaches or negligence or covered should any of these issues occur.

This means your legal defense expenses will be covered, or any indemnification that has arisen because of a dispute or lawsuit with one of your business’ customers.

Media Liability

This area of protection provides coverage for any infringement of your intellectual property that has happened as a consequence of marketing your services. The only exception is patent infringement.

This tends to apply to both online and offline marketing. This means everything from your printed advertising efforts, such as marketing brochures, to your social media posts will be covered.

Network Business Interruption

The cyber liability insurance policies of today can also include network business interruption. Determining whether or not you need to include this in your plan depends on how much your business relies on technology.

We know that most companies today have a high reliance on technology, which is why this feature is so pivotal for many. Network business interruption is an ideal solution for any business that is going to face and operational risk as a consequence of a data breach.

If the network provider you use or your own network goes down because of an incident, you will be able to recover the extra costs, fixed expenses, and profits that you have lost because of this.

This includes any losses caused by either system failure or security failures. System failures include a human error or failed software patches, for instance, whereas a third-party hack is an example of a security failure.

Privacy Liability

Finally, we have privacy liability, which is another type of insurance plan that is going to be critical for most businesses, especially those that have privacy or information risk.

Employee and customer details can be sensitive, and when such data is exposed via a breach it can be damaging on many levels.

Of course, it puts all the individuals whose data has been exposed at risk. However, it also puts your business at risk of liability as well.

Therefore, by incorporating privacy liability into your cyber liability insurance coverage you can make certain that your business will be protected from any of the liabilities that happen because of privacy law violations or a cyber breach.

There are several third-party expenses that can result. This includes liabilities needed within your contractual obligations and any liabilities that laws and governments enforce.

For example, you may find yourself in a position whereby you need to fund legal aid to protect your business from federal penalties.

In Closing

So there you have it: an insight into cyber liability insurance and the different areas that are covered.

There is no denying that this form of insurance is essential for all businesses in the current day and age, especially when you consider how real the threat of a data breach is.

Nevertheless, do not allow this urgent need to rush you into a decision when choosing a policy. Simply going for the first or cheapest plan you lay your eyes on is not advisable.

You need to make sure that the policy is right for you, so please do not hesitate to get in touch with us for more information.