Complete Coverage for an Online Economy
In 2020, more businesses than ever before moved online—and hackers jumped to take criminal advantage of the unprecedented opportunity. Companies scrambling to enhance online infrastructure often neglected to sufficiently enhance cybersecurity protocols as well, leading to damages experts expected to reach $6 trillion.
Data breaches can devastate companies, large or small. They put revenue at risk and often result in ruinous public relations. Companies typically hold Commercial General Liability (CGL) plans to cover emergency liability. However, traditional CGL policies alone typically prove insufficient for cyber attacks. This fact is why cyber liability insurance is important, and why companies need comprehensive plans to ensure cyber attacks don’t lead to unweatherable losses.
What is Cyber Liability?
Put simply, cyber liability or cyber insurance refers to expenses a business faces as the result of a cyber attack. The term covers a broad range of costs both directly and indirectly related to the breach. These costs generally fall into two categories: first-party costs and third-party costs.
First-Party Cyber Liability Costs
First-party costs are direct expenditures incurred covering damages resulting from a data breach. They include the technical operations involved in dealing with a cyber breach, such as hiring forensic IT consultants and rebuilding damaged digital assets, especially websites and networks.
First-party costs also cover notifying clients and providing credit monitoring to customers to prevent identity theft.
Finally, they may also include hiring a PR firm to minimize damage to a business’s reputation.
Third-Party Cyber Liability Costs
Third-party costs refer to the legal ramifications of a hack. They include costs resulting from both government fines and lawsuits affected clients bring.
Particularly in cases where such highly sensitive data as medical records has been put at risk, federal and state regulations may include fines for breaches. Large-scale data breaches may also lead to class action lawsuits filed on behalf of customers whose data and privacy have been compromised.
Why Your Client’s Business Needs Cyber Liability Coverage
1. Specific Cyber Coverage Caters to Unique Cyber Needs
As mentioned before, while CGL is extremely important for businesses, many companies are often surprised to discover those plans do not cover cyber liability.
Cyber risk liability insurance offers a wide range of specialized services tailored to the particular damages an attack can inflict on a business’s network. They cover a diverse set of damages including:
- Breach Response Services (forensics, notifications, credit monitoring)
- Ransomware / Ransom payments
- Business interruption (sales lost due to downtime, system failures, etc.)
- Digital asset damage (cost to rebuild when the ransom is not paid, or when not everything is recovered)
By purchasing a comprehensive cyber plan, your client can be sure they’ve covered all their bases in the event a cyber attack interrupts their business and compromises their data.
2. Every Industry Has Cyber Risk, and Every Business is a Target
Due to the rapid proliferation of digital infrastructure across the economy, industries that were once primarily analog are now connected to the internet. This situation puts them at risk for a data breach. Sectors as diverse as manufacturing, education, healthcare, and service have all seen massive cyber attacks in recent years.
The risk isn’t limited to large corporations, either. Small businesses are less likely to have sufficient cybersecurity protocols, regardless of industry. This lack makes them targets in a world where the barrier to entry for cybercrime is shockingly low.
Fortunately, risk management services make it easy to find the best combination of coverage items meeting your clients’ needs.
3. Cyber Coverage Simplifies the Work for Companies in Crisis
When a data breach occurs, the last thing your client needs is the additional strain of navigating the complex web of associated legal requirements. Depending on the industry, the personal data your client holds, and the state in which your client’s customers reside, reporting and notification regulations vary.
Cyber liability insurance allows the timely setup of notifications, question hotlines, and credit monitoring plans, as well as other vital operations. Additionally, many plans include PR support, allowing companies to focus on restoring internal function instead of their outward image.
To learn more about why cyber liability insurance is important for your business clients, download our Six-Step Guide to Becoming Your Clients’ Cyber Expert today. Or speak with a ProWriters expert to find out how we can start helping you better serve your clients.
