Cyber liability policies are becoming more and more complex with time and often are tailored or customized to your specific business type. While not all the below scenarios may be covered by your specific policy or may have a sub-limit that reduces available coverage, Part 3 of our miniseries will discuss real-life examples of situations that might result in a serious loss for your business.

Situations that could result in a Cyber Related (First Party) Loss

Keep in mind that not all first and third-party exposures will be able to be provided insurance protection or they may need to be coordinated with other insurance coverages

• A security breach typically results in costs/expenses to investigate the source of the security breach (forensic investigation) and the costs to repair (find and fix the problem).
• A virus in a business’s computer system can result in a loss of or damage to electronic data. An introduction of a virus can also result in a cost to hire an IT expert to investigate, remove the virus, and research to see what records were damaged or lost. The business can also incur overtime or cost to hire temporary workers to reenter lost or damaged data.
• A ransomware infection can result in costs to solve the issues of getting data back because of an infection in the computer system. Costs/expenses include potential extortion demand or ransom payment.
• An unauthorized user (hacker) could make an extortion demand or require a ransom payment in return for not releasing valuable information. Commonly known as cyber extortion.
• A website infected with malware can result in the cost/expense to clean up the website. Malware can slow the computer system down and inhibit business sales.
• An unauthorized person (hacker) or a rogue employee can cause vandalism or malicious mischief to a website. This can also result in the cost to investigate, the cost to repair the website, etc.
• If personal or confidential files are breached, there is also the cost to notify the affected parties. This can include:
• Cost/expenses to notify people and organizations about the breach and to minimize identity theft exposures.
• Regulatory proceeding expenses including court costs and legal fees
• Expense to hire a public relations firm to protect or restore a business’s reputation.
• Security breaches can also result in:
• Loss of income due to a business interruption
• Expenses to minimize a business interruption
• Expenses to recertify the computer system as compliant with the Payment Card Industry Data Security Standard to allow the business to again accept credit card payments.
• Loss of income due to loss of reputation and brand
• Some breaches are done by hackers who just want to breach a system for gratification, for a challenge, to find vulnerabilities, or just to prove they can. Some hackers do not intend to cause damage to a website or steal or distribute information. However, there is still a cost by the business to investigate for possible damage. If personal or confidential records have been breached, then there is a cost to notify the affected parties as required by regulations.
• Theft of intellectual property. An unauthorized user (hacker), former employee,or rogue employee may breach a computer system and steal intellectual property owned by the business. This is sometimes also referred to as corporate espionage.
• Computer fraud. Unauthorized use can result in the theft of money, securities, and other tangible property through computer fraud.
• Losses as a result of “social engineering.” A business loss due to the voluntary parting of money, securities, and other tangible property using a computer system. Essentially an employee of the business is tricked into giving away information or access to information.
• A denial of service or distributed denial of device attack to a website or social media platform can result in a loss of income.
• There are costs/expenses to research and rebuild databases damaged by mechanical breakdown, electrical disturbances, temperature changes, humidity, theft, and other physical causes.

In our next series Part 4 – What is Cyber Liability (Third Party) Insurance Coverage we will take a deeper drive into Third Party liability coverages and how they can protect your business.

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.