What is Cyber Liability Insurance?
Cyber Liability insurance is an important piece of an effective insurance program for any company who maintains a website and conducts business via the internet. Cyber Liability insurance provides important coverage for risks associated with conducting business via the internet and/or storing information on a network.
One of the most important exposures covered by Cyber Liability insurance is privacy injury and identity theft alleged against you. In the unfortunate event of a hacker or virus breaching your network’s security and compromising data, the Cyber Liability policy responds. The policy will provide your company coverage to meet client notification requirements, which can vary drastically from state to state. In addition to providing for your notification expenses, the Cyber Liability policy will provide defense and settlement coverage for breach of privacy allegations brought against you.
A properly designed Cyber Liability policy also provides important coverage for network damage. This includes coverage for damage to your network due to viruses, denial of service, and security breaches as well as damage to others’ networks and information unknowingly caused by you.
Examples of Cyber Liability Claims
Claims covered by Cyber Liability insurance can vary widely in terms of nature and severity. Claims can include incidents such as an employee at a web development company who defeats his company’s network security defenses to gain access to a customer’s trade secret. The employee then sells the trade secret to the customer’s competitor. The customer sues the web company for lost profits resulting from the company’s failure to protect its trade secret.
Another example of a covered Cyber Liability claim is a non-profit charity accepting donations charged to the donor’s credit card via the internet. A hacker penetrates the charity’s network security and copies donor identification information and card data. The hacker then sells the information to an ID theft ring. Later, the stolen information is used to withdraw funds from donors’ bank accounts. The donors sue the charity to recover stolen funds and the cost to repair their credit history.
In both cases, the Cyber Liability policy provides coverage for defense and settlement costs as well as any required notification expenses.
Who Needs Cyber Liability Insurance?
Whether your company uses the computers and the internet to communicate with others (e-mail, blogs, etc), collect and store information, or uses it’s website to conduct customer transactions, you have important Cyber Liability risks to consider. Cyber Liability insurance is important for any company who maintains a website, conducts business via the internet, accepts payment via the website, or stores non-public client and/or employee information within a network.
Visit us at Small Business Product Liability Insurance to consult with an insurance professional who will construct a Cyber Liability Insurance policy that will work for you.
Andrew Schwab, CIC, is an experienced insurance professional, working with Ahmann-Martin in suburban Minneapolis. His practice is focused on providing affordable insurance alternatives for all types of professionals.Share