What is cyber liability insurance?
Cyber Liability and Privacy Insurance Policies are designed to cover a variety of liability and property losses that result when a business engages in various electronic activities such as selling on the internet or collecting data. Most notably, cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ information such as Social Security numbers, credit card information or medical records are stolen by a criminal who has gained access to the firm’s electronic network. These policies pay expenses associated with a data breach including: notification costs, credit monitoring, defense of claims by state regulators, fines and penalties and loss resulting from identity theft.
Important things that you need to know about Cyber and Privacy Insurance:
The average cost of a data breach to an organization jumped from $5.9 million in 2014 to $6.5 million in 2015. The average cost per compromised record in in 2015 was $218., of which $74 amount relates to direct costs associated with forensics, notification, credit monitoring and public relations. (Information obtained from 2015 Cost of Data Breach Study: Global Analysis, Ponemon Institute)
Cyber liability can cover the costs associated with lawsuits alleging trademark or copyright infringement, invasion of privacy, defamation or product disparagement, as well as, regulatory proceedings seeking fines or penalties as a result of actual or potential unauthorized access to private information.
As technology advances and evolves, so do Cyber Liability policies. More and more insurance carriers are entering the marketplace by offering some type of cyber liability insurance product. The coverage forms need to be reviewed and analyzed carefully to determine the best protection available for the insured.