Cyber Liability Insurance
Once thought of as a niche product for companies operating predominantly in the online space – Cyber Liability Insurance is now coverage every company must consider. Whether it is an employee laptop left at a coffee shop, a DDoS hack which shuts down your company site or a social media scandal which tarnishes the reputation of your brand, you need to be prepared. Such scenarios, along with others, are becoming commonplace.
Your business needs to understand the risk management procedures and staff training required, as well as the coverages now available to be properly protected. No business connected in any way with the internet (and who isn’t!) is safe from privacy breaches and cyber attacks, and hackers grow more sophisticated each day.
A recent study found that 31 percent of companies have purchased some type of cyber policy. Approximately 25 insurers now offer this type of insurance, and all these carriers offer coverage for both first-party and third-party losses. The market is very dynamic; the coverage available varies from insurer to insurer, and in some instances the policy offered is not even named a “cyber policy.”
First-party coverage insures for losses to the policyholder’s own data or lost income or for other harm to the policyholder’s business resulting from a data breach or cyber attack. Types of available include:
- Theft and fraud.
- Forensic investigation.
- Business interruption.
- Computer data loss and restoration.
Third-party coverage insures for the liability of the policyholder to third parties — including clients and governmental entities — arising from a data breach or cyber attack. Available coverages include:
- Litigation and regulatory.
- Regulatory response.
- Notification costs.
- Crisis management.
- Credit monitoring. Media liability.
- Privacy liability.
These coverages are not equally available. Insurance for losses arising from a breach of customer or employee privacy is easier to find, and there appears to be substantial capacity in the insurance marketplace for this type of coverage. On the other hand, insurance coverage for the ancillary financial loss arising from data or privacy breaches, such as lost business income and loss of the value of destroyed information assets is harder to find.
Because the market for cyber insurance is not mature and the scope of coverage available and cost can vary significantly from insurer to insurer, it is important to involve an insurance broker with experience and knowledge about cyber insurance in the insurance-buying process. An experienced broker can identify the insurers who offer the product most suited to your company’s needs and help negotiate favorable terms and price. Working together, a team including your McLean Hallmark broker and outside counsel can ensure that you purchase the right coverage with appropriate terms and conditions.
Small and midsize businesses are ideal candidates for cyber insurance, because they may be less prepared for a data breach and less able to absorb the costs associated with a breach. Larger companies, with more substantial risk management and legal departments, are better equipped technically and financially for a data breach, but the correct insurance is still a necessary adjunct.
Our Specialist Broker
Ron Courneya has developed significant expertise in this area and provides support to our team of industry experts that works with you on other aspects of your business insurance through McLean Hallmark.
Ron will be able to outline for you the 14 Key Factors in Buying Cyber Insurance.