The one crime that puts a business in a dangerous position in 2019 is cyber security breach. Norton Security estimates that cybercriminals will steal an estimated 33 billion records in 2023.
A data breach can bring down the business’s operations to its knees, whether the crime relates to a breach of data or stolen information.
In this article we’ll cover what exactly cyber liability insurance is , how it will protect your business, and if you have a breach, how to file a claim.
Understanding Cyber Liability Insurance
Also known as the internet liability insurance or data breach coverage, this insurance policy covers property loss and liability that occurs when a business is struck with a data attack. The information collected is electronic in nature, and when the data is breached, cyber liability insurance comes into effect.
Here’s what this policy covers:
- Privacy/data breach insurance covers expenses associated with remediating and investigating a cyber-attack, along with regulatory fines and legal costs.
- Multimedia coverage that protects a website from being compromised or defaced.
- Extortion liability coverage that deals with ransom attacks where hackers hold the data hostage.
- Network security liability that insures you from attacks that my compromise third parties, who you hire for payment processing or other such services.
Here’s an example of cyber liability coverage:
You own a company that manufactures car components. One of the employees, while procuring materials for the parts, accidentally clicked on a Trojan link that was sent via email. A malware spread through this email and infected the company server.
Every piece of information was encrypted and the board of directors received a message that if the company did not pay $10,000 in Bitcoin, the hacker will not provide the decryption key. They were given 48 hours to make the exchange or the hacker was going to release sensitive information about the company.
A cyber crime unit was called and the CEO got in touch with the company’s insurance agent to do damage control. Thankfully, the culprit was caught but not before some of the data was corrupted. Information was still in the safe and partial data was recovered. The incident response expenses were covered by the insurance agency and the company continued operations unscathed.
The extent of cyber liability insurance goes beyond just protecting a company from a data breach. A company that deals with sensitive information on a daily basis should invest in this policy.
The list of services that are covered in cyber liability insurance is pretty long. It includes entertainment, automotive, community, contractors, education, food and dinning, health and medicine, legal and financial, manufacturing, personal care, real estate, retail shopping, transportation, and businesses.
Focusing on the business side of this insurance policy, it covers companies that are engaged in providing services to residential customers and business establishments on a fee basis or a contract. The services as followed:
Administrative and Support Services
Computer and Electronic Product Manufacturing
Miscellaneous Professional, Scientific, and Technical Services
Day Spas (Manicurists/Pedicurists)
News and Media
Television and Radio Broadcasting
Scientific Research and Development Services
Specialized Design Services
Information Needed for Filing a Cyber liability Claim
When determining rates for cyber liability insurance, the agency looks at a number of things. Businesses need to make sure that they are providing accurate information to the insurance agency, so that when the time comes to file a claim, there are no delays.
The following factors are considered before a quote is given:
Description of Operations
The type of business you run and what kind of sensitive information is collected on a daily basis.
The business’s total revenue decides how big the operation is. The amount of money flowing into the company is used to set a bench mark for the coverage. The policy can also be customized to include third-party liabilities.
Transactions Processed or Records Stored
How often are purchases made online through credit cards by the company? This helps set the rate through the transactions made. The agent goes through the stored record to find out what the extent of the coverage will be.
If you own a company that majorly deals with customers and business through online transactions, then the exposure to cyber liability will be bigger. Hence, the cyber liability coverage for such companies will be greater.
Has your company been exposed to cyber incidents or litigations in the past? Who were the people involved: vendors, employees, customers, or outside parties? The incidents that took place 3 years before are looked at to find out what the damage was, and the information collected is used to set the rates.
Depending on what coverage you are choosing, you have the option to make a few additions in the policy such as protection from computer fraud, cyber terrorism, (related to the political side of the business) and fraudulent transfer of funds.
Don’t forget to include third-party liability coverage because the data breach that concerns third-parties puts you at risk of being sued by thousands of customers. You need to make sure that your network is secure and capable of handling an attack automatically. With so much advancement in technology, such services are easily available but that doesn’t mean you should not purchase cyber liability insurance.
If you are looking for a qualified insurance agent who holds years of experience in this field, then visit Pawson. The company provides cyber liability coverage for all types of businesses operating in diverse fields. To know more about their policies, contact them at 203-481-8898.
Digital Marketing Director
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