Cyber Liability
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CYBER LIABILITY INSURANCE

Introduction: Cyber Liability

Introduction: Cyber Liability

Cyber Liability Insurance protects against the first - and third-party risks that arise when your client conducts business online. These policies have evolved in recent years, but they typically cover the costs associated with security and privacy issues, claims regarding media and content, extortion expenses, and crisis management.

The Basics of Cyber Liability Insurance

The Basics of Cyber Liability Insurance

Cyber Liability Insurance covers your client from the complications of doing business on the Web or storing sensitive information on their media devices. Other traditional liability policies, such as General Liability Insurance, don't cover cyber events.

Cyber Liability is typically divided into two types of policies:

  • First-party coverage provides financial compensation to your client when they need to address immediate business or customer issues after a covered cyber attack. For example, if your client experiences a data breach that exposes their customers' credit information, first-party coverage can pay for the expense of notifying customers, forensic services to determine the cause, or PR measures to restore your client's reputation.
  • Third-party coverage protects your client when a third party, such as a customer or partner, brings a lawsuit against your client, alleging their negligence caused the data breach. Judgments, civil awards, and settlements may be covered. Electronic media liability, such as copyright or domain name infringement, may be included, too.

Your client can choose to have either or both of these coverages. Moreover, Cyber Liability Insurance can be purchased alone, or it can be added to a Business Owner's Policy.

Who Needs Cyber Liability Insurance?

Who Needs Cyber Liability Insurance?

More and more business is conducted on the Internet. For example, retailers, healthcare providers, IT professionals, and educational institutions can all be exposed to cyber risks when they handle credit and bank account information, medical information, or Social Security numbers. Some of your clients may also store private company information (e.g., financial information) on their computer network.

If your client participates in ecommerce, disseminates information, or handles sensitive data via the Web, they may want a Cyber Liability policy. This is true even if your client's data is stored in "the cloud." If your client's cloud provider makes an error, Cyber Liability can shield your client from subsequent lawsuits.

Clients who have a limited Internet presence benefit from Cyber Liability Insurance, too. The policy may cover your clients when..

  • An employee's laptop or USB drive with sensitive information is stolen.
  • A computer malfunction sends a mass email containing customer information.
  • An individual claims your client misused his name and image on the company's website.
  • An employee fails to shred documents containing private customer information.
  • A hacker extorts money by threatening to infect your client's computer network with a virus.
  • A server crash causes your client to halt normal business operations.