Cyber Insurance Covers the Cost of First- and Third-Party Damages
If your clients are like many companies, they probably use computers to send, receive, or store electronic data on a daily basis. That data could include tax records, payroll, or any other information owned by the organization. If that information is damaged or stolen due to a data breach, it could be very costly, in terms of both replacing it and regaining the trust of their customers.
A dedicated cyber policy will help your clients to cut down on a wide range of costs in the event of a breach, as this cyber insurance policy sample hows. For example, a system might contain sensitive data belonging to employees, vendors, or customers. If that data is lost or compromised, your client could be sued for damages. They could also incur substantial notification expenses, as most states have laws requiring businesses to inform people when their personal data has been compromised.
Although we often hear about big corporations falling victim, small and medium-sized businesses are the most vulnerable. Having cyber liability insurance is the most straightforward and effective way to help your clients secure the future of their business!
What is Cyber Liability Coverage?
Cyber liability insurance covers the costs of recovering from a security breach, virus, or cyber attack. It also covers legal claims resulting from the breach.
Most cyber policies include first-party and third-party coverage. Some are included automatically and others can be added “a la carte.” First-party coverage means paying the expenses your business directly incurs from the incident, such as the cost of informing customers of the attack. Other examples of first-party coverage include:
- Damage or Loss of Electronic Data
This covers the cost of recovering or replacing data or programs affected by a breach. You’ll want to check which perils are covered by the policy; for example, losses from cryptomining, a virus, or a denial of service attack. Policies may cover the cost of hiring IT experts to investigate and reconstruct the data.
- Loss of Income
This covers income losses experienced as a result of business interruption, as well as other expenses incurred to avoid shutting down. This is an especially important point because according to the Cost of a Data Breach Report, 2019, business interruption represents a whopping 36% of the cost of a cyber breach.
- Cyber Extortion
This applies when a hacker breaks into your system and threatens to release a virus, denial of service attack, or encrypts the data to demand a ransom payment. This coverage typically extends to any ransom payments you make as well as any expenses incurred in the process. Ransomware has become far more common in recent years, with companies paying an average ransom of $43,590 in Q3 and Q4 of 2019.
- Reputation Damage
Certain policies cover the costs of marketing and public relations to protect the company’s reputation after an attack. On a cyber insurance policy sample, it may be called Crisis Management.
Not all of these will be included in every cyber policy and some will be subject to a deductible, so it’s important to look at your options in-depth to determine the right coverage for you.
Third-party coverage refers to legal claims against your business by people who have been injured by the attack. For example, if a hacker stole a customer’s personal information and posted it online, third-party coverage would pay for the cost of a lawsuit against you. The major areas of third-party coverage include:
- Network Security and Privacy Liability
This covers claims of negligence, errors or omissions, unauthorized access, the introduction of a virus, or any other lawsuit associated with the security breach. This includes claims alleging that you failed to protect sensitive data, whether that data belongs to customers, clients, or employees.
- Media Liability
Electronic media liability insurance covers lawsuits against you for libel, slander, defamation, invasion of privacy, or other types of infringement. These acts are generally covered only when they are the result of your publishing data online.
- Regulatory Proceedings
Due to data breach laws, you may incur fines from regulatory agencies in the event of a breach. Third-party coverage can pay for these expenses, as well as the cost of hiring an attorney to assist in your response to any legal/regulatory proceedings.
ProWriters Can Help You Find The Right Coverage
ProWriters offers upwards of 20 years of experience in the cyber insurance industry. Known for our excellent customer service and deep knowledge of cyber insurance, we make the process of buying and selling cyber policies as easy as it should be.
Whether you’d like to see a high-quality cyber insurance policy sample or want to compare rates for similar plans, we can help. Our Cyber IQ Comparative Rate Portal makes it simple to quote and compare cyber policies to find the best match for your client.
We also offer free resources to assist agents and brokers, including our eBook How to Sell Cyber: Big Claims in Ransomware & Social Engineering. This guide provides information on the nuances of cyber risk and how to sell cyber insurance to your clients in light of current regulations.
To learn more about how ProWriters can assist you, please give us a call at 484-321-2335.