Unfortunately, data breaches and other cyber-crimes are becoming far too common. In the past couple of years, data breaches have resulted in major fines and legal fees – not to mention headaches – for a discount retail chain, one of the nation’s largest banks, a well-known health insurer, an entertainment network and the federal government.
However, it’s not just large organizations that are at risk of being hacked or getting a virus. 55% of small businesses have experienced a data breach and that 53% have had multiple breaches.
A data breach can damage more than just your computer system, it also can damage your reputation and put your clients and employees at risk. This is why Cyber Insurance is important for any size business.
Like many businesses, your firm may use, store, send, or receive electronic data. This data may include information that belongs to your business, like sales projections and tax records. It may also include data that belongs to other people, such as clients, employees, and vendors. For example – social security numbers, employment records, addresses & dates of birth, payment information and other sensitive data.
If electronic data stored on your firm's computer system is lost, stolen, or compromised, the cost of restoring it can be significant. Additionally, your company may be liable for damages to third parties whose data has been stolen. Your firm may also incur notification expenses if your state requires you to inform those affected by a data breach. You can protect your business against the costs associated with data breaches by purchasing a cyber liability policy.
Cyber liability insurance covers financial losses that result from data breaches and other cyber events. Many policies include both first-party and third-party coverages.
First-party coverages apply to losses sustained by your company directly. For example, damage to your company's electronic data files caused by a hacker.
Third-party coverages apply to claims against your firm by people who have been injured as a result of your actions or failure to act. For instance, a client sues you for negligence after his personal data is stolen from your computer system and released online.
While cyber liability policies vary from one the next, many provide similar types of coverages. The most common coverages are outlined below.
Cyber liability policies typically include various property and crime coverages. They also cover certain costs, such as notification expenses. First-party coverages are often subject to a deductible or retention.
Most cyber policies include more than one type of liability coverage. These coverages apply to damages or settlements that result from covered claims. They also cover the cost of defending you against such claims. Note that defense costs may reduce the available limit of insurance. Virtually all cyber liability policies are covered on a ‘claims-made’ basis. Some third-party coverages may also be subject to retention.
Other coverages that may be available under a cyber liability policy include various crime coverages such as computer fraud, funds transfer fraud, and cyber terrorism (acts of violence committed for political purposes). Some insurers have developed cyber liability policies tailored to specific industries. For example, one policy may be designed for businesses in the healthcare industry while another policy is intended for financial institutions.
Businesses are facing more threats from online attacks. Cyber liability insurance can help mitigate your organization’s risk. Learn from Kovalev Insurance.