Along with the rise in identity theft, cybersecurity has taken the spotlight as a serious issue. High profile data breaches from recent years include health insurer Anthem, the dating website Ashley Madison, online marketplace eBay, banking giant JP Morgan Chase, and big box stores like Home Depot and Target.
In addition to the data breaches that make headlines are the smaller ones occurring in nearly every industry you can think of, from healthcare to finance to retail. In the age of identity theft, personal data equals big money. The cost of these data breaches registers in the billions each year.
Enter cyber liability insurance, designed to protect organizations from incurring these costs.
What is Cyber Liability Insurance?
Organizations that conduct business online, or maintain an electronic database of customer data, are susceptible to cyber attacks. If a hacker breaks into the system, the company may incur both property and liability losses.
A cyber liability insurance policy covers the organization’s liability for data breaches, such as criminals hacking into the personal records of customers to steal credit card and social security numbers. Coverage includes a variety of potential expenses, including legal fees, fines, notification costs, and real property losses. These policies also cover cybersecurity issues beyond data breaches, such as computer fraud, data loss, and liability for online content.
Cyber liability insurance shares some features with technology errors and omissions insurance (often called tech E&O insurance) but is actually its own product. Tech E&O was designed to protect companies providing tech services and products. This includes off-site data storage companies, web designers, and software/hardware developers.
What Does Cyber Insurance Cover?
Like every other insurance product, coverage specifics vary depending on the policy. There are four common components in a cyber policy, but not every policy includes all four.
Errors and omissions coverage handles claims based on errors in the services your organization provides. This includes technology services as well as non-tech industries, such as healthcare.
Media liability coverage is similar to traditional liability policies meant to protect companies accused of libel or slander, copyright infringement, and more. The difference here is that this coverage extends to the company’s online presence, from its website to its social media accounts and even banner ads. You may also choose to have media liability coverage include offline content.
The two areas that have grown the most in recent years are network security and privacy. Network security comprises the practices companies employ to protect data from hackers, but also from viruses. Hackers may hold your compromised data hostage (commonly referred to as cyber extortion) or cause an interruption in your services, making it impossible to conduct business.
Privacy coverage is not confined to technical breaches; it may include physical records. It can even mean human error, such as an employee losing a laptop or throwing out records without shredding them. It also protects businesses against employees stealing customer information, a serious threat in every industry but particularly in healthcare.
A cyber insurance policy may include any combination of these items, or even break each of these into subcategories. Unfortunately, these policies are new enough that universal terminology hasn’t yet developed. That makes comparing, or even understanding, coverage challenging. Don’t be afraid to ask for clarification.
How to Limit Your Cyber Risk
Even though you have homeowner’s and auto insurance, you still lock up and even set the alarm. You need to take precautions with your cyber presence as well.
Start with a risk assessment to identify potential vulnerabilities. In addition, if you opt to purchase cyber liability insurance, this assessment helps determine coverage needs and insurability.
Protect software and hardware from viruses and other attacks with regular updates. If you don’t have on-site IT services, contract with an IT company to handle these security issues. You also need to back up data daily, using either an onsite or an offsite server. This helps protect records from disaster.
If you’re interested in learning more about cyber insurance, or would like to learn about other business insurance products, the team at San Tan Insurance is ready and willing to answer any questions you have. Contact us today for a free quote.