In today’s times when data breach and cyberattacks are common headliners, there’s nothing more imperative for companies than to be insured for any impending attacks. But surprisingly many companies are not aware that they can actually insure their network and electronic data. For the unfamiliar, say, hello to cyber insurance. In this article we cover what cyber insurance is and what benefits you can get from it.
What is Cyber Liability Insurance Coverage (CLIC)?
Cyber insurance is a broad term covering a number of insurance coverage that minimizes the cost that may arise from cases of cyberattack or data breach. It can be a standalone policy or an add-on to a company’s existing insurance policy. Cyber liability insurance coverage or CLIC may include:
Network security liability: this coverage applies when an attacker targets your network operations to extract data, destroy data, transmit virus or cause it to shut down. Costs related to any of these activities can be insured under network security liability.
Data breach or Privacy liability: this covers any expenses that may arise from data breach, the cost of notifying the individual owners of confidential data, cost of forensics and investigations required, legal costs and other regulatory fines relating to data privacy. This coverage may also cover even the breach of physical records and files, lost laptop, and even human errors that may result into the disclosure of confidential information.
Multimedia or media liability: This policy covers third party injury claims such as copyright infringement, plagiarism, website defacement, libel and defamation. This liability coverage deals mostly with the cost relating to crisis management in marketing and advertising effort of companies.
Errors and omissions. This type of insurance protects companies from third party injury claims that may arise from system failure, software performance errors and other failures in technology services.
Just a reminder, there’s no one size fits all cyber insurance. Some insurers may include other components not listed here. This makes cyber insurance policies of two insurers difficult to compare. In this article, we would only focus on the first two, Network security and Data Breach liability coverage.
In Focus: Network Security and Data Breach Liability Coverage
In the age of more sophisticated cyber crimes and data breach incidents, a network security and data breach liability coverage is what companies need to steer clear of hefty cost of data breach. What’s good about network and data breach liability coverage is that it covers both first party and third party costs. For instance, in case of data breach, the insurance will cover the first-party cost of notifying the data subject about the breach while also covering the third party cost of legal settlements and damages related to the breach.
First-party Coverage includes protect from the cost of the following:
- Crisis Management and Response. These are the cost for the forensic investigation of the cyberattack and legal services required. It also includes expenses in notifying the affected data subjects, providing credit monitoring services to customers and expenses for the efforts to restore the reputation of the affected company.
- Business Downtime. The loss of income due to network security attack and other expenses incurred resulting from the same.
- Data Asset Recovery and Protection. The expenses incurred to recover data and bring them back to complete safety and the expenses incurred in regain access to software or data from back-ups.
Third Party Coverage:
- Regulatory fines and penalties
- Legal defense
- Settlements and damages related to the breach
Why cyber insurance matters to you?
The hefty cost of regulatory fine should be a compelling enough reason to secure an insurance, let alone the increasing number of incidence and sophistication of cyberattacks today.
Covers what traditional liability insurance does not cover. Current commercial general liability (CGL) only insures your physical asset and does not cover the intangibles like electonic data and software. Hence, in case of cyberattack, CGL won’t cushion the hefty damage of data breach or software failure.
Cushions you from an unexpected financial nightmare.
A data breach incident is one of the most expensive business problems that’s impossible to budget for. There’s no way you could figure the scope and extent of a cyberattack. Hence, an insurance is the best option to cushion you from the crippling expenses of solving the cyber fiasco and the penalties to the authorities.
Indirectly helps you boost your cyber security and data protection governance
The concomitant underwriting process will definitely push companies to look over their current cybersecurity status in order to maximize available coverage and the cost. Shoring up your data house before purchasing an insurance is win-win for every company.
Provides mitigating tools and resources in case of cyberattack.
Insurance providers offer resources to companies undergoing data breach crisis which is largely helpful for companies that lack manpower and resources to respond to the crisis promptly. These may include services for forensic investigation, communications in notifying data subjects and legal assistance in case of class-action lawsuit.
Darrell Smith is a data / cybersecurity news junkie. He spends most of his time surfing the web for the latest data and network operations center trends. He also shares his recent findings through his articles and other blog posts.