Cyber Liability Insurance
Cyber criminals have increased their activity in recent years and become less picky about their targets. Large corporations, small businesses and nonprofits across all sectors must be aware of the threat that cyber criminals pose. Furthermore, given the increasing importance of technology in most workplaces, organizations may be at greater risk of being targeted by cyber attacks than ever before. Given the potential risks and exposures related to cybersecurity, all companies need to understand the benefits of cyber liability insurance.
What Can Cyber Liability Insurance Protect Clients From?
Cyber attacks can come in many forms, all of which may inflict significant financial losses and even reputational damage. Phishing scams, malware infections, social engineering and even physical theft of electronic devices can all expose an organization to devastating cyber incidents. Although robust cybersecurity measures may help initially repel such attacks, all it takes is a single errant click or misjudgment from one member of an organization for a cyber criminal to potentially gain access to private and sensitive data. Cyber liability insurance will be essential after a cyber attack reaches its target.
How Does Cyber Liability Insurance Work?
As its name suggests, cyber liability insurance provides financial protection for policyholders following a data breach or other cyber incident. This coverage may be customizable to suit an organization’s specific needs, but generally, most policies should be capable of responding with financial assistance for the following:
- Incident response costs—If an organization experiences a cyber incident, an adequate cyber liability insurance policy may cover the cost of investigating the attack and notifying affected parties
- Additional services—In the wake of a cyber incident, a business may be able to access financial resources to cover additional staff or services, such as IT contractors, credit and fraud monitoring and public relations.
- Repair/replacement costs—This coverage can help policyholders pay for repair or replacement costs arising from compromised systems or devices.
- Cyberextortion payments—Cyber criminals may use ransomware to hold an organization’s data hostage and may even demand payment with the threat of releasing sensitive data to the public.
- Business interruption losses—A cyber incident may force a company to cease or alter its normal operations temporarily. This coverage can help pay for resulting costs, such as lost income.
- Legal expenses—If a policyholder affected by a cyber incident is fined by regulatory agencies or sued by affected parties, this coverage can help absorb resulting losses, including settlements and judgments.
How Much Does Cyber Liability Insurance Cost?
Like most types of insurance, the cost of sufficient cyber liability coverage may vary significantly among organizations. Before being able to provide an accurate quote for adequate protection, insurance companies will usually consider the following:
- Workforce size
- Cybersecurity controls
- Number of customers, clients or patients
- Type and amount of sensitive data being stored
- Annual revenue
- Prior claims history
- Policy details (e.g., coverage limits)
Get the Right Coverage
With over 60 years of experience serving Rhode Island and southeastern Massachusetts, the insurance professionals at Cormack-Touthier Agency Inc. are well-equipped to help organizations protect themselves from cyber threats with optimal coverage solutions. We will comprehensively analyze your circumstances and work with you to craft an ideal cyber liability insurance policy. Contact us today to get started.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.
Categories: Cyber Liability
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