CYBER INSURANCE

Why CYBER Insurance

Cyber liability insurance, sometimes short for cybersecurity, privacy, and media liability insurance, helps your company respond in the event of a cyberattack or data breach. If your network or computer systems are hacked into or corrupted by a virus, for example, cyber liability insurance can be essential.

Unfortunately, data breaches have become commonplace in today's financial world, especially in America.

According to a recent survey, nearly two-thirds of retailers in the United States have been victims of some type of data breach, and 37% have been breached in the past year. That risk will continue to be present, since almost all of the retailers surveyed (96%) claim they use sensitive data within digitally transformative environments.

8 Reasons Why You Must Purchase Cyber Insurance Now

Risks that aren’t on the radar of many small business owners, but should be.

We put out a lot of information on cyber crime and the need for Cyber Insurance. We do it because it’s the world’s fastest growing crime – and nobody is immune. Worse, anyone from the kid next door to your dedicated employees can be perpetrators. But worst of all, more often than not, cyber attacks aren’t typically covered by your standard property or crime policies.

If that isn’t enough to convince you that you need a cyber policy, here are nine more reasons why you do.

We usually hear about big businesses being targeted by hackers, but small companies are also at risk. Small businesses typically don’t have the financial resources to rebound after a cyber attack or data breach.
Data is a critical business asset, but one not covered by standard property insurance. The value of your data is likely more than that of the equipment in which it’s stored. A cyber policy offers coverage for data restoration in the event of a loss.
You’ll face severe penalties if you lose credit card data. Credit card crime is a $7.5 billion industry worldwide – and growing. Merchant service agreements will hold compromised retailers liable for the cost of a forensic investigation, re-issuing new credit cards, and even the actual fraud of the stolen cards. Even the smallest retailer can be liable for costs that can soar well into the hundreds of thousands of dollars.
Your electronic system downtime due to a cyber attack won’t be covered by standard business interruption insurance. If a ransomware attack, computer virus or untrustworthy employee shuts your systems down, a traditional business interruption policy won’t cover your losses. Cyber insurance offers coverage for lost profits associated with a cyber-related systems outagePortable devices increases the risk of data loss or theft. A laptop or tablet left on a plane, a cell phone stolen in a purse snatching, or a misplaced USB stick are all potential scenarios. Your device in the wrong hands could mean big trouble. Cyber insurance can help cover the costs associated with a data breach resulting from a lost, stolen or hacked device.
Social media usage is at an all-time high and your business likely depends on it for marketing. Unfortunately, sometimes not enough thought is put into what and how a message is presented. This can result in claims that you or one of your employees made defamatory or libelous comments, leaked information, or infringed on a copyright. Defending against such claims can be quite costly, and Cyber Insurance covers those costs.
Third-party data is valuable to your business, but it belongs to your suppliers and customers. Guess who pays if you lose it? Most commercial contracts and non-disclosure agreements address the security of third-party data that could trigger claims if your business experiences a data breach. Consumers, too, are frequently filing lawsuits for damages when a business loses their sensitive data.
It’s expensive and time consuming to comply with breach notification laws. These laws typically require businesses that lose personal data to provide written notification to all potentially victims. Cyber policies cover the costs associated with issuing a breach notice.
Your reputation is your best asset, so insure it. Certain risks to your reputation can’t be insured, but not so if you experience a data breach. When data is compromised, you risk losing the trust of your customers and suppliers. Cyber Insurance helps pay for a public relations firm to help restore this trust and covers the loss of future sales resulting from customers switching to your competitors.

What Is Cyber Liability Insurance?

Cyber liability insurance is an insurance policy designed specifically for data breaches, malicious attacks, and other cybersecurity threats. Some policies are tailored to a certain industry, such as retail, healthcare or banking. While the primary goal of cyber liability coverage is to protect the business, it can also extend to the clients who interact with the business.

There are two types of cyber liability coverage:

First-party coverage: Covers financial losses incurred directly by the business, such as loss of income during a shutdown.
Third-party coverage: Covers losses resulting from other people affected by the cybersecurity incident, such as a customer suing a business after identity theft.

These policies may also be referred to as 'cyber and privacy insurance' or 'media insurance.' They typically require a deductible in the event of a claim, much like a liability policy for car insurance.

What Does First-Party Cyber Liability Insurance Cover?

First-party cyber liability insurance covers the expenses a business may experience after a data breach. These include:

Lost income from business interruptions
The cost of repairing hardware/software
Extortion money required by a hacker
Loss of transferred funds
Public relations costs, such as notifying employees and clients about a data breach
Losses from corrupted or stolen electronic data
Reputation management expenses after a cyberattack

The precise coverage and liability amounts vary by provider and by policy.

What Does Third-Party Cyber Liability Insurance Cover?

Third-party cyber liability insurance is mostly designated for legal claims. Coverage may include:

Fines and fees from regulatory organizations
Negligence claims
Network privacy and network liability claims
Breach of contract claims
Libel, slander, defamation, copyright infringement, and other media liability claims

Want to Learn More?

The Forbes website has some good information about CYBER INSURANCE.

To visit them, go here.

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