What Is Cyber Liability Insurance?
Cyber Liability Insurance is designed to cover businesses that serve clients by engaging in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network. For the most part, Cyber Liability Insurance covers a business’ liability for a data breach in which the company’s customers’ personal information, such as bank account numbers, Social Security or credit card numbers, was exposed or stolen by a hacker. These policies usually cover a variety of expenses resulting from data breaches, including:
- Notification costs
- Costs to defend claims by state regulators
- Cost of fines and penalties
- Credit monitoring
In addition, the policies often cover liability arising from content place on the business’ website, as well as property exposures from:
- Business interruption
- Cyber extortion.
- Data loss/destruction
- Computer fraud
- Funds transfer loss (Phishing)*
*It is important to read each policy carefully as some coverages, such as phishing, aren’t always included automatically. For example, if your company wrongfully transfers funds to another business or individual due to a phishing attack, your Cyber Liability Policy may not cover it.
Some Common Misconceptions:
- My sensitive information is stored on a third party web-server and/or cloud. It is their (legal) responsibility to keep the data safe: You may want to read your contract more carefully if you assume that all responsibility to keep your client’s data safe falls on another tech company you pay to store sensitive data. That responsibility falls ultimately on the company that collected the information to begin with. Especially if your company caused the security lapse, there is little to no chance that the web or cloud hosting company will step in to bear some of the costs.
- We have the best security software and system in place and any breach is the other company’s responsibility. Just as with web-hosts and cloud servers, the party primarily responsible to keep confidential data secure is the company that obtained the information from the client.
- Cyber Liability Insurance is a waste of money. Costs to investigate a breach and comply with statutory notification requirements – in 2015, the average cost was $217 per lost or stolen record.* Fact is, that the frequency of attacks and the cost to defend them have gone up substantially in recent years with no end in sight.
Unauthorized Access at a Non-Profit Organization
An international computer hacking group gained access electronically
to the computerized database of a foundation and stole credit card
information of 5,000 donors, starting a flood of fraudulent purchases
around the world.
An employee of a private high school mistakenly distributed via e-mail
the names, social security numbers, birthdates, and medical information
of students and faculty creating a privacy breach. Overall, 1,250
individuals’ personal information was compromised.
As criminals are getting smarter about their techniques, your business needs to make sure to not only have safety and security measures in place, but also the right cyber liability coverage.
Please do not hesitate to call us at 425-242-5252 to find out how you can better protect your business.
1500 Benson Road South, Suite 201
Renton, WA 98055
*According to the 2015 Cost of Data Breach Study: United States, Ponemon Institute, May 2015