The rapid evolution of technology and the tested contribution to the development and improvement of business make more business owners engage. The use of technology in any facet of business keeps the organization up-to-date with the fast-growing industry and in touch with its market and competitors. As technology advances, so do its risks and threats. Any business that utilizes technology is vulnerable to cyberattacks. The majority of these businesses think that their general liability insurance covers such risks. Unfortunately, the distressing claims caused by cyberattacks are not covered by general liability insurance. This is where cyber liability insurance comes in.
What is Cyber Liability?
Cyber liability is any loss that may arise due to data breach. While data breach is the term used for small to medium-sized companies, cyber liability is used if the affected party belongs to large scale businesses.
What businesses are prone to cyber liability?
Any size or nature of the business that uses or engages with technology is at risk of cyberattacks. Some companies enforce data or information security protocols to ensure the safety of their records and documents. Even so, most of the time, even these precautions are not enough to protect the company from cyber thieves. Cyber liability insurance is vital for types of businesses listed below.
- Businesses that process electronic or online payments
- Healthcare or medical facilities
- Banks/loans/financial institutions
- Government agencies
- Educational institutions
What are the types of cyberattacks?
Cyber predators prey on organizations, and they use various steps to steal, modify, or destroy any stored information or the entire computer data system. Here are the five common types of cyberattacks.
- Malware software attack
- Spear phishing or phishing
- Password attack
- Drive-by attack
- SQL installation
Why is cyber liability insurance vital?
While companies invest in security software and enforce policies to ensure their computer network system safety, cyber liability insurance covers business losses, expenses, fines and penalties, and business interruption in case data breach happens.
Not all cyber liability insurance is the same. Business owners must know the insurance policy provisions on both first-party and third-party coverage.
The first-party liability or coverage protects the business from costs suffered from cyberattacks. This includes:
- Computer system and automated data restoration costs cover expenditures to reinstate lost data from system damage caused by a computer virus or unapproved access.
- Funds transfer scam covers for loss of cash or securities caused by fake money transfer instructions to a business institution.
- Crisis management covers for public relations services to alleviate undesirable publicity.
- Security breach notification and remediation cover the costs of reporting to breached individuals, credit checking, fraud expenditure reimbursement, and customer service assistance.
- E-commerce threats cover cash paid as an effect of threats completed to falsely transfer funds, extinguish data, install a virus, attack an information system, or reveal electronic consumer information.
- Computer fraud covers for loss of securities, cash, or other assets due to unlawful system access.
- Business disruption and additional incidentals cover the loss of revenue and costs to restore operations.
- Third-party coverage claims are results of litigation or governmental sentences resulting from cyberattacks.
- Communications and broadcasting liability cover for claims deriving from copyright infringement, defamation, plagiarism, slander, and libel in electronic content.
- Information security and network liability cover all claims arising from unlawful access to information, failure to notify clients affected by a data breach, the spread of computer viruses, and the miss of accredited users access to the corporation website.
- Regulatory security expenses cover governmental claims due to network and information security liability or communications and media liability.
The loss deriving from cyberattacks is extremely damaging not only to the business itself but also to its customers. Technology breach comes in many forms. Business owners are often caught off guard. Cyber thieves spend countless hours to organize and execute their unlawful acts. With the different kinds of coverages enumerated above, it is the business owner’s responsibility to ensure that safety nets are in place in case of data breach or cyberattacks. Coordinate with your cyber liability insurance agent as they are the best people to explain the policy coverages and limitations. Ask all possible ‘what if’ questions and scenarios.
About Daniels Insurance, Inc.
At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.