Cyber liability policies is made up of various different parts and can include many different Insuring Agreements. In this episode of our miniseries, we are going to explain the most important and common Insuring Agreements that can be found in a Cyber Liability policy
What is an Insuring Agreement?
An Insuring Agreement is the portion of an insurance policy in which the insurance carrier promises to make payment to or on behalf of the insured. The agreements are the coverages and terms that are provided by the policy. Below, we are going to explain the specific Insuring Agreements on a typical Cyber Liability policy.
- Security Breach Expense (1st Party Coverage)
- Covers a loss that results directly from a Security Breach or Cyber Incident that takes place during the policy period. This agreement can include expenses for other items related to a Security Breach or Cyber Incident:
- Forensic Expenses
- The costs to investigate the breach, including the cause, scope, and to identify all affected parties
- Notification Expenses
- The costs to notify all parties affected by the breach. This is required by both Federal and State level privacy regulations.
- Post-event Monitoring Expenses
- The costs to provide credit monitoring and identity monitoring services to the affected parties.
- Post-event Monitoring Expenses
- The costs to provide credit monitoring and identity monitoring services to the affected parties.
- Public Relations Expenses
- Fees and costs of a public relations firm or other expenses incurred by you to protect or restore your reputation as a result of negative publicity.
- Security Breach Liability (3rd Party Coverage)
- This agreement would pay for a loss that you become legally obligated to pay, including Defense Costs. This includes coverage for Payment Card Industry (PCI) Fines and Penalties and claims as a result of a Regulatory Proceeding. This coverage agreement would trigger as a result of a Wrongful Act, actual or alleged, as a result of a Security Breach. Below is what would be considered a Wrongful Act per standard policy wording:
- Wrongful Act
- Failure to prevent unauthorized access or use of your electronic or non-electronic data that contains identity information. This includes names, email addresses, physical addresses, credit card information, social security numbers, etc.
- Failure to prevent transmission of a Virus through your computer system.
- Failure to provide notification of any actual or potential Security Breach, when Security Breach Notification is required by law.
- Extortion (Ransomware)
- Covers an Extortion Threat taking place during the policy period. This includes the fees and costs for a security perm or other person/organization hired to determine the validity and severity of the extortion threat. This agreement would also cover the ransom payment made as well as the interest if a loan was taken to make the ransom payment.
- Replacement or Restoration of Electronic Data
- This agreement would cover the cost related to the replacement or restoration of your electronic data (computer programs) that are stored on your system as a result of being lost because of a Cyber Incident. This would include the additional costs for data entry, reprogramming, or computer consultation services.
- Business Income and Extra Expense
- Business Income is more commonly known as your Business Continuity insurance. This agreement would provide coverage in the event, as a result of a Cyber Incident, the business was unable to operate and income was lost as a result. The most common scenario would be servers going down or your businesses primary systems going down. This agreement would provide coverage for net income lost, the cost or continuing normal operations, including payroll, after a timed deductible (8 or 12 hours). The Extra Expense section of this agreement would cover necessary and reasonable expenses you would incur during the interruption, that you would not have incurred if there was no interruption. This coverage would allow you to avoid or minimize any suspension of your electronic activities.
- Media Liability
- Web Site Media Content Liability, also known as Media Liability, provides coverages related to your media content, both creating and disseminating content, typically via a website. Coverage includes claims of defamation, slander, libel, or product disparagement. It also typically includes coverage for the following:
- Appropriation of name or likeness or publicity that places a person in a false light
- Public disclosure of private facts
- Infringement of title, slogan, trademarks, trade names, trade dress, service mark or name
- Copyright infringement, plagiarism, or misappropriation of information
- Improper deep linking or framing
- The Media Liability Insuring Agreement would trigger as a result of the events listed above, both actual or alleged.
- Technology Error & Omission
- Technology Errors & Omissions, also known as Tech E&O, is not one type of insuring agreement but rather a different type of coverage that includes many of the same insuring agreements of a Cyber Liability and Professional Liability policy. A Tech E&O policy is designed to cover providers of technology services or products, such as data storage companies or website designers. One provides a technology product and the other a service, just as an example. A Tech E&O policy covers the insured for both liability and property loss exposures, examples below:
- Liability
- Technology Services
- Technology Products
- Media Content
- Cyber Security Breaches
- Property
- Business Interruption
- Crisis Management
- Extortion
In our next series Part 7 – Cyber Insurance, Bringing it all together we will wrap up and summarize what we have previously discussed.
We provide Cyber Liability Insurance for all types of firms in Newton, Needham, Wellesley, and all of Massachusetts. Contact Kovalev Insurance for cyber liability insurance and request a complimentary consultation to ensure your business is properly protected.
