In an age where cyberattacks and data breaches are on the rise, businesses cannot go without a comprehensive cyber liability insurance plan to protect their business and assets in the event of a cybersecurity threat that becomes a reality. Whether you own a small business, a large organization, or simply work out of the comfort of your own home, cyber liability coverage is something you should look into.
What is Cyber Liability Insurance?
Cyber liability insurance is a form of commercial insurance that protects a business against data breaches that involve sensitive customer information stored on your company’s devices. While professional liability insurance protects against negligence claims, also known as errors and omissions, it will not cover malicious attacks on customer data that come from outside your organization.
What is Covered Under Cyber Liability Insurance?
Cyber liability insurance safeguards many types of customer information, which may include:
- Credit card, bank account, and other financial information
- Identifying information like social security numbers, driver’s license numbers, etc.
- Medical and healthcare information
- Personal information like customer names, phones numbers, addresses, email addresses, etc.
In the event that one of your systems is breached and this data is stolen or compromised, your cyber liability insurance plan can cover the cost of many things:
- Notification of customers of the applicable data breach (most states require that companies notify those who may have had their information compromised)
- Recovery and restoration of data and identify protection for impacted customers
- Repairs to computer systems and software
- Loss of business
- Investigation into the attack
- Regulatory fines
- Legal services and lawsuits made against you
What your cyber liability insurance covers (and how much) is dependent on the plan you craft with your commercial insurance provider.
Who Needs Cyber Liability Insurance
If you handle, transfer, or store any personal information regarding your clients, cyber liability insurance is essential for your business. The costs of a data breach can sink a business if they do not have the necessary protection. You should have some sort of cyber liability insurance if you do any of the following:
- Accept credit cards, bank transfers, or any other form of digital payments
- Handle personal, medical, financial, or any other type of information that belongs to your clients
- Store client information on servers and devices that you own and manage
What Cyber Insurance Doesn’t Cover
There are several things that many standard cyber liability insurance plans will not cover:
- Intentional acts: these can include fraud, criminal conduct, or other intentionally wrongful actions
- Prior acts of knowledge: data breaches that the business had prior knowledge of
- Criminal court costs: if the data breach results in criminal charges being filed against you or your business, the insurance policy generally will not cover the costs
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.
Looking for cyber liability coverage for your business? Get in touch with the commercial insurance experts at The Patrick J. Thomas agency today.