Cyber Liability Insurance
It’s important to protect your business and financial assets from a variety of liability risks. In today’s connected world, companies exchange highly confidential information via tech-enabled tools that make them vulnerable to any number of cyber crimes. From hacking and spear phishing to extortion and malware, these fraudulent practices can sabotage data security and compliance standards that are in place to guard company information.
At Doeren Mayhew Insurance Group, we arm our clients with cyber insurance ahead of being forced to address the complexities that come with these crimes. We take a comprehensive approach in helping to protect organizations that are vulnerable to cyber attacks. These include businesses that store large volumes of personal data, depend on technology to successfully operate, or require compliance with data security provisions. Read on to learn more about how cyber liability insurance can mitigate financial losses in the event of a cybersecurity breach.
What is Cyber Liability Insurance Coverage?
Cyber incidents, such as social engineering or a network security breach, can pose a major financial challenge when an organization only has standard business insurance. That’s why it’s imperative that businesses that collect and store confidential or sensitive information online should secure separate coverage that’s known as Cyber Liability Insurance. Cyber insurance is a type of commercial liability insurance policy that covers the financial losses caused by cyber threats. While it doesn’t cover things like costs associated with system upgrades, decreased valuation, and future financial losses, it does typically cover four areas of risk, including privacy, security, operational and service, as outlined below.
Types of Cyber Insurance Coverage
Network Security
This coverage includes first-party costs, or expenses that you incur as a victim of cyber crime, including investigative forensic efforts, legal fees, public relations services, data restoration, or ransom payments.
Privacy Liability
If confidential or private data is governed by a regulatory agent, privacy liability insurance will help cover compensation requests in the event that information is stolen. These third-party expenses may come out of contractual liabilities or regulatory assessments.
Network Interruption
This type of insurance coverage helps protect businesses that rely on a technology network to operate. Losses arising from a system failure or security failure triggered by a cyber attack may be covered with a network interruption policy.
Media Liability
This coverage provides protection for intellectual property infringement resulting from advertising or related promotional efforts. This type of cyber insurance can help cover losses incurred as a result of both online and traditional advertising collateral, but generally does not cover patent infringement.
Errors & Omissions (E&O)
This coverage provides protection when a business faces allegations of negligence or breach of contract when a cyber attack disrupts regular operations. Albeit temporary, this type of service interruption could lead to costly claims that can be mitigated with E&O coverage.
First-Party vs. Third-Party Coverage
First-party cyber liability insurance covers costs associated with the data breach and direct impact that the attack has on your business operations. This would include things like:
- Sending out communications to impacted customers
- Credit monitoring
- Public relations and reputation management support
- Any other activities related to the direct recovery of your business
Third-party cyber liability insurance involves the aftermath of a cyberattack or data breach and the potential lawsuits that may come with it. If your business gets sued after an attack, this coverage would help to cover legal fees and damages associated with the incident.
When you are purchasing cyber liability insurance, it is important to understand the distinction between these two types of coverages.
How Much Does Cyber Liability Insurance Cost?
Cyber insurance commercial policies are typically scaled to meet a business’ unique needs. It’s also important to note that organizations can save money on cyber liability insurance by paying the annual premium upfront and investing in and implementing data security measures.
Key factors that may inform a policy’s premium cost include:
- The industry your business is in
- Coverage limits and deductibles
- Operating revenue
- Risk profile for cyber attacks
- Security protocols in place
- History of cyber attacks or data breaches
- Types of data or information your business handles and stores
How We Can Help
Whether you’re a small business or a Fortune 500 company, cyber liability insurance will protect your organization against financial risks in the event of data breaches or other cyber attacks. Limiting risk by securing this type of insurance coverage is an integral part of your company’s broader data security model.
At Doeren Mayhew Insurance Group, we provide the time-tested guidance in securing the right insurance policy to protect your bottom line. Schedule a consultation with one of our trusted agents to discuss your unique cyber liability insurance needs today.
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