Learn about cyber liability insurance - which designed to cover consumers of technology services or products. Also known as data beach - these policies can cover a both liability and property losses that can happen when a business sells online or collects and stores customer data like Social Security or credit card numbers on its network.
Cyber Liability Insurance
There are lots of commercial insurance policies available if you run a business, and you are going to need to select several different ones to fully protect yourself.
General liability and commercial property insurance are pretty common policies when you own a business. General liability protects you against things happening during normal course of business (like a slip and fall of a customer on your premises) that can cause others to bring a lawsuit.
Obviously, someone's Social Security or credit card information getting stolen is part of that, but general liability doesn't offer the coverage needed for this possibility - considering the sophistication and skills of today's hackers.
That's why many businesses, both large and small, are adding a cyber liability insurance policy to their existing insurance portfolio.
What is Cyber Liability Insurance?
Understanding exactly what cyber liability insurance is the first, and most important step in determining whether or not this type of insurance is right for you. A data breach insurance policy protects your business against data losses that are caused by cyber-attacks. It doesn't just protect customers in the liability that you have for protecting their information, but it also protects your business as well.
If you do a lot of business with credit cards, or you have sensitive information that you need to protect, then you definitely need to consider cyber liability - because lots of companies are being targeted these days, and small businesses that do not protect themselves are easier targets.
Who Needs Cyber Liability Coverage?
The first thing that you have to do is determine whether or not you need cyber liability insurance coverage. The real question is whether or not your company uses electronic data. If the answer is yes, then you probably need data breach insurance. However, most of the time cyber liability insurance is only needed when the data is sensitive.
If your business does any of the activities listed below, you should have this coverage:
- Communicates with clients through email, social media, or text messaging.
- Sells goods via a website.
- Sends or receives electronic documents.
- Stores information that belongs to clients or employees on a computer network; names, addresses, credit card numbers, medical records, dates of birth, social security numbers, or personal identification numbers, for example.
- Uses a computer network to store pertinent data; accounting records, sales projections, or tax documents, for example.
- Uses forms of electronic media for advertising purposes; social media channels or a website, for example.
To stress what a large issue hacking is, the FBI has a page dedicated to Cyber Crime. Here is a quote from that page:
The FBI is the lead federal agency for investigating cyber attacks by criminals, overseas adversaries, and terrorists. The threat is incredibly serious-and growing. Cyber intrusions are becoming more commonplace, more dangerous, and more sophisticated. Our nation's critical infrastructure, including both private and public sector networks, are targeted by adversaries. American companies are targeted for trade secrets and other sensitive corporate data, and universities for their cutting-edge research and development. Citizens are targeted by fraudsters and identity thieves, and children are targeted by online predators.
Why Cyber Liability Insurance Is So Important
If you own a business, this policy is so important because it covers lawsuits that come from data breaches and even attacks on your website like DDOS attacks. These lawsuits may not be covered by your standard liability policy, which is why many businesses opt to add cyber liability onto their coverage.
That's because damage to electronic data doesn't actually qualify as property damage and the liability that you have for a data breach may not be one of the liabilities listed with your normal general liability insurance. In fact, many general liability insurance policies specifically include electronic data exclusion.
But cyber liability can cover things like viruses that destroy important information that is irreplaceable as well as data breaches. The easiest way to tell if you need data breach is to examine your commercial general liability policy and see if it covers electronic data.
For your reference, following is the actual language used in the ISO Commercial General Liability Coverage Form (standard form used by most insurers for their CGL policies):
Electronic Data - Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. However, this exclusion does not apply to liability for damages because of "bodily injury". As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CDROMs, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.
Understanding Cyber Liability Insurance Policies
You should be familiar with cyber liability insurance policies as well. These policies vary from company to company, so you want to check yours carefully to ensure that yours is covering everything that you do. Data breach policies protect businesses against lawsuits filed by customers in most cases, and may protect against various other problems stemming from a data breach. But you have to check the policy carefully.
In fact, you probably want to talk to your insurance broker upfront and find out if the policy covers what you need to. Some policies include extras as well including libel or slander claims, invasion of privacy and more. In the case of an online attack that shuts down your business for several hours or days, you could be out thousands or tens of thousands of dollars. Having a policy like business income insurance can offer you peace of mind.
How Much Does Cyber Liability Insurance Cost?
The cost of this type of coverage varies depending on the type of data breach insurance you choose and the amount of coverage you opt for. Cyber liability insurance premiums are calculated on a company's industry, services, type of sensitive data stored or collected or processed, the total number of PII/PHI records, computer and network security, privacy policies and procedures and annual gross revenue, and more.
Additional Insurance To Consider
There are some additional insurance options that you may want to consider along with cyber liability insurance. These additional policies can go hand-in-hand with your data breach coverage and protect you further. Most businesses have the standard property damage and commercial general liability insurance, but these are often not enough coverage to give you complete protection.
One of the types of insurance that are optional add-ons is business income insurance, which protects you in cases where your business is not making money and umbrella coverage that can extend the liability coverage and limits in your current insurance plan and make sure that you are completely covered.
How To Get Coverage For Cyber Liability
In order to start cyber insurance coverage, you need to talk to your insurance agent or broker. If you already have insurance, then you might want to talk to whoever you already go with, but if not, there are plenty of insurance companies out there that can offer you this coverage along with other types of polices for your business.
Even if you do already have general liability or property insurance, you can still get cyber liability insurance from a different company. Many people prefer to do this so that they can shop around to get the best deal instead of just going with whatever rate they are quoted from their current insurance company.
List Of Large Data Breaches
This list shows just some if the companies whose customer data was compromised in just 2016 and 2017 - it is hard to imagine how much damage the breach caused the companies, insurers and most importantly - their customers or account holders:
- Adult Friend Finder
- America's JobLink
- Blue Cross Blue Shield / Anthem
- Bronx Lebanon Hospital Center
- Brooks Brothers
- California Association of Realtors
- Deep Root Analytics
- Dun & Bradstreet
- E-Sports Entertainment Association (ESEA)
- FAFSA: IRS Data Retrieval Tool
- Forever 21
- Heartland Payment Systems
- Home Depot
- Hyatt Hotels
- InterContinental Hotels Group (IHG)
- JP Morgan Chase
- Maine Foster Care
- Online Spambot
- River City Media
- RSA Security
- SVR Tracking
- Sabre Hospitality Solutions
- Saks Fifth Avenue
- Sony's PlayStation Network
- Target Stores
- TalentPen and TigerSwan
- TIO Networks
- TJX Companies, Inc.
- U.S. Securities and Exchange Commission (SEC)
- UNC Health Care
- University of Oklahoma
- US Office of Personnel Management (OPM)
- Washington State University
- Whole Foods Market
- Xbox 360 ISO and PSP ISO
Cyber Liability Insurance - The Bottom Line
We hope this article on the cyber liability insurance has been informative. The bottom line is that there are plenty of different types of insurance out there for businesses. You definitely want to have general liability coverage and property insurance of the bare minimum. Depending upon the type of business that you have, you may also need additional types such as workers compensation, commercial automobile insurance, spoilage insurance, business income insurance and more.
But in today's world where everything is electronic and almost everyone pays with their credit card or debit card, data breach insurance is more important than ever. Businesses that do not have cyber liability insurance suffer the same risks as other companies, but they will have to pay for any damages or lawsuits themselves - instead of relying upon their insurance coverage when a breach happens. Many businesses do not want to take that chance and instead look into cyber liability insurance. Cyber liability insurance cost, cyber liability insurance carriers, cyber liability insurance claims examples, cyber liability insurance quote, cyber liability insurance application, cyber insurance definition, cyber insurance providers and cyber insurance small business.