3 Important Things You Did Not Know Cyber Liability Insurance Covered
Almost every business today uses computers of some sort to carry out essential business functions. These computers could send or receive information, store information, communicate with those both inside and outside of the organization, and so much more.
If any of this data is lost, stolen, damaged, or even held for ransom the future of your business could be at stake. Information is expensive to recover, so you need to assure your business has cyber liability insurance to protect against lost or damaged information.
Let us begin talking about what cyber liability insurance is and then transition into defining three important things you did not know it covered.
Cyber Liability Insurance Definition
Cyber liability insurance is an insurance policy that covers financial losses resulting from data breaches, cyber-attacks, viruses, and other technology-related risks.
Most information covered under cyber liability insurance involves sensitive customer information like Social Security numbers, credit card information, account numbers, health records, and so much more.
Cyber liability insurance policies often provide coverage for both first and third-party damages.
First-Party Coverage
First-party coverage will cover the cost of anything that directly results from the data breach. Here are some examples of first-party coverage in a cyber liability insurance policy.
- The cost to recover lost or damaged data, no matter who it belongs to. The loss must fall under a covered peril in your policy.
- Income loss and extra expenses incurred to avoid a shutdown.
- Cyber extortion coverage, which includes payments to get data back and to meet other demands.
- The cost of notifying affected parties.
- Cost of protecting your companies’ reputation.
This is not an all-inclusive list of what cyber liability insurance covers, and it is also important to note that most of these items are only covered if the loss falls under a covered peril in your policy.
Third-Party Coverage
Third-party cyber liability coverage will cover a claim made against your organization by those affected by the cyber-attack or accident.
Some examples of third-party cyber liability coverage include:
- Covers a claim made against your firm when the claimant says you were negligent.
- If you publish electronic data on the internet, electronic media liability insurance will kick in. This covers things like libel, slander, defamation, copyright infringement, invasion of privacy, etc.
- Coverage for fines and penalties from regulatory agencies.
Now that we understand the differences between first and third-party coverage in cyber liability insurance, let us look at some important things you did not know had coverage.
Three Important Things You Did Not Know Were Covered
Cyber liability insurance is becoming increasingly common as businesses are transitioning to computer-based processes. Here we will define three important things that cyber liability insurance covers that many insureds are unaware of.
1. Notification Costs
Notification costs are those that businesses must pay when notifying the parties involved in a data breach. This includes both voluntary disclosure and disclosure required by law.
These costs can include things like setting up call centers or teams for notifying those who the data breach affected or providing extended services to those people.
2. Reputation Damage
Reputation damage coverage includes costs that businesses incur to protect their reputation.
Let us look at an example. You are the owner of a successful up-and-coming social media platform and there is a data breach and thousands of users personal information is leaked. This looks bad for your company, and you must pay for services like lawyers and public–relations specialists to help you through the situation.
When these services protect the organization’s reputation, the cost falls under reputation damage on your cyber liability insurance policy.
3. Electronic Media Library
A type of third-party coverage that falls under cyber liability insurance and is often overlooked is electronic media library insurance. This coverage protects you in cases of libel, slander, defamation, copyright infringement, and more because of a data breach.
Who Needs Cyber Liability Insurance?
Every business that runs on and stores essential information on the web or computers needs cyber liability insurance. More businesses are running online, so this coverage is becoming more important.
A great example of a business that needs cyber liability insurance is a business using a Certificate of Insurance (COI) tracking and management software. These software’s are hosted online through secure data centers, but it is still important to make sure you have the right coverage to protect your data.
If you want more information about COI tracking, check out the SmartCompliance website to schedule a free product demo.
