Few Years back Cyber Liability was hardly discussed in small businesses. As the digitalization process picked up its pace so are Cyber Liability related claims.
Everyday, new cyber-crimes are changing how we think about cyber exposures and scope of related liability.
The risk is rapidly growing day by day. It does not matter how big or small your business is, cyber liability protection is key to safeguarding your business.
At Aaxel insurance, we work hard to get you the right cyber insurance coverage at competitive price.
Top 5 Questions related to Cyber Risks and Liability
a. What is Cyber Liability Risk?
The potential of loss or harm related to technical infrastructure or the use of technology within an organization is called Cyber Risk. In simple terms Cyber risk is commonly defined as exposure to harm or loss resulting from breaches of or attacks on information systems
b. Who Should Have Cyber Insurance?
Almost all and every type of business needs Cyber Liability Coverage. e.g.
- Website Operators and e-tailers
- Healthcare Providers
- Leisure and Entertainment Companies
- Manufacturers and Wholesalers
- Professional Service Companies
- Educational Institutions and
- anyone who is not in this list.
c. What is Cyber Liability Insurance?
Cyber liability insurance covers financial losses that result from data breaches and other cyber events. Most cyber policies include both first-party and third-party coverages. Some coverages may be included automatically while others are available “a la carte.”
First Party Coverage pay expenses your firm directly incurs as result of the breach, such as the cost of informing your customers about a hacker attack. Third-party coverages apply to claims against your firm by people or companies that have been injured as a result of your actions or failure to act. For instance, a client sues you for negligence after a hacker steals his personal data from your computer system and releases it online.
First Party Coverages
Here are the types of first-party coverages you are likely to find in a cyber liability policy. These coverages may be subject to a deductible.
Loss or Damage to Electronic Data
Covers the cost to replace or restore electronic data or programs damaged, destroyed or stolen in a data breach, whether the data belongs to your firm or someone else. Losses must result from a covered peril such as a hacker attack, a virus, or a denial of service attack. Policies may also cover the cost of hiring experts or consultants to help preserve or reconstruct data.
Loss of Income and Extra Expenses
Covers income losses you suffer and extra expenses you incur to avoid or minimize a shutdown of your business after your computer system fails due a covered peril. Some policies, including the Hartford and Travelers policies cited above, cover dependent income losses. These are income losses you sustain when your network provider’s system has been breached.
Applies when a hacker breaks into your computer system and threatens to commit a nefarious act like damaging your data, introducing a virus, initiating a denial of service attack, or releasing confidential data unless you pay a specified sum. Coverage typically extends to any extortion payment you make and expenses you incur in responding to the demand.
Covers the cost of notifying parties (voluntarily or as required by law) affected by a data breach. May also cover the cost of providing credit monitoring services and establishing a call center.
Damage to Your Reputation – Some policies cover costs you incur for marketing and public relations to protect your company’s reputation following a data breach. This coverage may be called Crisis Management.
Each cyber liability policy contains unique terms that are explained in the Definitions section. To understand the policy, you need to know what the terms mean.
Third-Party Liability Coverages
The liability coverages afforded by a cyber policy are usually claims-made. Coverage typically applies to damages or settlements that result from covered claims as well as the cost of your defense. Note that defense costs may reduce the limit of insurance.
A cyber liability policy may include a retention, an amount you must pay before the insurer will make a payment.
Network Security and Privacy Liability
Covers claims against your firm for negligent acts, errors or omissions that result in a denial of service attack, unauthorized access, introduction of a virus, or other security breach of your computer system. Also covers claims alleging you failed to properly protect sensitive data stored on your computer system. The data may belong to customers, clients, employees or other parties.
Electronic Media Liability
Electronic media liability insurance covers lawsuits against you for acts like libel, slander, defamation, copyright infringement, invasion of privacy or domain name infringement. Generally, these acts are covered only if they result from your publication of electronic data on the Internet.
Covers fines or penalties imposed on your firm by regulatory agencies that oversee data breach laws.
d. I believe my business policy covers this Cyber Risk. Is that true?
It may be true and we can review that with you. We are certain even you have some form of coverage it will not cover to the extent of an actual Cyber Insurance product.
e. What if we outsource our IT to a trusted partner and store data in the cloud?
Well qualified technology partner using latest technology, firewalls and encryption will certainly help reduce the risks of a breach. Using a best in class cloud provider can provide some assurance that your data will be protected.
However, the who and where is still subject to the fact a large number of cyber threats come from human error – internally and externally. Your risk can depend on the contractual agreement between you, your customers and vendors.