Oct 10, 2018

The Need for Cyber Liability Insurance is Rising

Cyber Liability InsuranceThe Internet has become a way of life for American consumers and businesses. From banking to shopping to social media, we release a lot of financial and personal data to the online world. It is incredibly convenient to conduct business online and most people and businesses don’t consider that they could be the next victim of a cyber attack. Unfortunately, cyber criminals have become much more sophisticated as well. From phishing schemes to malware to large-scale DDoS attacks, everyone who uses a computer is vulnerable. While that sounds discouraging, the good news is that you can protect yourself with cyber liability insurance.

What is Cyber Liability Insurance?

Cyber liability insurance is a sub-category under a general insurance policy that protects individuals and businesses from online risks and liability they may face from Internet activities carried out by others. If you purchase a policy, you can choose from first-party or third-party coverage. The first type compensates you for direct losses from cyber crimes while the second type also covers claims and other legal actions initiated by business partners or customers who suffered a loss due to a breach in your business security.

Business and Personal Plans

Insurers offering this coverage typically cater to small and mid-sized businesses to entire enterprises and corporations. For business customers, the insurance policy covers losses stemming from the collection of private data such as social security numbers, credit card numbers, and contact data such as customer addresses and telephone numbers.

Individuals can also consider purchasing cyber liability insurance if they’re concerned about issues such as restoring their identity and credit as well as pursuing legal action against those responsible for these crimes. Some plans also offer coverage for physical damage to the computer as well as virus protection.

Typical Coverage Under Each Policy Type

You naturally want to know what your policy will cover before investing in it. Here are some of the most common losses that a first-party cyber insurance policy will pay:

  • Notifications of security breaches: If your company experiences a data breach, you must legally notify your customers within 30 days. When you have thousands of customers, the expenses can add up quickly. Some of the costs a plan could pay for you include setting up a call center to process claims, legal fees, and offering credit monitoring services to customers.
  • Income loss and additional expenses: This portion of your policy pays for loss of income due to a computer system shutdown. It can also cover other losses and expenses associated with getting the system back up and running.
  • Recovery cost: Cost to hire a public relations firm to restore your company’s reputation. Some insurers refer to this as crisis management protection.
  • Reimbursement for cyber extorsion: Ransomware and related malicious programs require the user to pay a fee to have their computer system restored. This is a common cost that you could recover with your insurance policy.

The following are common types of coverage under a third-party cyber liability policy:

  • Electronic media liability: When you publish online, someone may sue you on the basis of copyright infringement, libel, slander, or defamation. This category of coverage protects you from the costs associated with such lawsuits.
  • Errors and omissions: This is useful if an employee failed to perform a job duty that would have prevented a cyber attack or made a mistake that left security vulnerable.
  • Network privacy liability: This coverage protects you if someone sues you claiming you failed to protect his or her sensitive personal or financial data.
  • Network security liability: This protects your financial interests if you become a party to a lawsuit due to a data breach or extended downtime.

When the Internet is your lifeline, a cyber liability insurance policy just makes sense. Alliance & Associates has partnered with Applied Business Solutions, provider of CyberPro, a unique and proprietary insurance product providing comprehensive technology protection and cutting edge solutions.

Questions?We can help you! Call us at (866) 771 4715 or click contact us to the right.

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