A Cyber Liability Insurance policy is somewhat of a new concept – but in today’s world, it’s a “must-have” coverage for any business that uses technology.
Like most businesses these days, your firm probably uses, stores, sends, and/or receives electronic data. This data may include information that belongs to your business, like sales projections and tax records. It may also include data that belongs to other people, such as customers, employees, and vendors. Examples of other people’s data are customer payment records and employees’ social security numbers.
If electronic data stored on your firm’s computer system is lost, stolen, or compromised, the cost of restoring it can be significant. Moreover, your company may be liable for damages to third parties whose data has been stolen. Your firm may also incur notification expenses if you’re required to inform those affected by a data breach. You can protect your business against the costs associated with data breaches by purchasing a Cyber Liability policy.
Cyber Liability Insurance is a type of insurance designed to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network. Most notably, but not exclusively, cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. The policies cover a variety of expenses associated with data breaches, including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.
Here’s a quick breakdown of the important benefits a Cyber Liability policy can provide:
- Data Breach Coverage: In the event of a breach, organizations are required by law to notify affected parties. This can add to overall data breach costs, particularly as they relate to security fixes, identity theft protection for those impacted by the breach, and protection from possible legal action.
- Business Interruption Loss Reimbursement: a cyber attack can lead to an IT failure that disrupts business operations, costing your organization both time and money. A Cyber Liability policy may cover your loss of income during these interruptions. Also, any increased costs to your business operations in the aftermath of a cyber attack may also be covered.
- Cyber Extortion Defense: ransomware and similar malicious software are designed to steal and withhold key data, until a steep fee is paid. At these types of attacks increase in frequency and severity, it’s critical that organizations seek Cyber Liability insurance, which can help recoup loses related to cyber extortion.
- Forensic Support: following a cyber attack, your organization will have to investigate to determine the extent of the breach and what led to it. The right policy can reimburse the insured for costs related to forensics and seeking out expert advice.
- Legal Support: in the wake of a cyber incident, businesses often seek legal assistance. This assistance can be costly! Cyber Liability insurance can help businesses afford proper legal work following a cyber attack.
- Coverage Beyond A General Liability Policy: general liability policies don’t always protect businesses from losses related to data breaches. What’s more, data is generally worth far more than physical assets, and it’s important that you have the right protection in place when you need it most. Supplementing your insurance with cyber coverage can provide you with peace of mind that, in event of an attack, your organization’s financial and reputational well-being is protected.
Information Systems of Montana does not offer these policies, as we are not an insurance provider or agency! However, we find that this is an incredibly important coverage for any business using technology to have. Questions? We can help point you in the direction of acquiring this insurance, or answer any questions you may have regarding your cyber liability exposure. Give us a call today to discuss!