Cyber Liability: What It Covers and Why You May Need It

by Kelly Weaver, PWCA - Account Executive
As we become more reliant on technology as a way to store and exchange data, cyber liability exposures become more of a financial risk.  If your business keeps digital private records, you have a Cyber Liability exposure.While each Cyber Liability Policy is a little different, most provide coverages for the following:

  • Loss of digital assets as a result of damage, alteration, corruption, theft, or misuse.  (Your Commercial Property Policy has a requirement for “Physical Damage” in order to trigger coverage).  
  • Loss of revenue from downtime after a hack or virus that causes a temporary or long-term shutdown in your operations.
  • Costs you incur complying with the state laws that pertain to a security breech.  These laws can include the obligation to notify all parties whose private information is compromised or believed to have been acquired by a person without authorization; as well as the duty to provide ongoing credit monitoring to all individuals whose data was affected by the breech.
  • Media Liability and Public Relation costs for damages and expenses resulting from defamation, libel, slander, and invasion of an individual’s right of privacy; plagiarism, infringement of any copyright or trademark.
  • Costs for liability claims of spreading a virus, malicious code, extortion, or a cyber-mistake, error, or omission, by your employees or subcontractors in the course of their duties for your company.
  • Payment you are obligated to pay as a result of damages and expenses arising from a privacy breech involving employee information.
  • Reimbursement for extortion expenses resulting from a threat.

When addressing your need for cyber liability, consider what type of sensitive information you store or exchange, and what type of security you have in place to protect this information from being compromised.  Names, dates of birth, social security number,s and medical information are just some of the data that hackers are looking to steal.

Traditional property and general liability policies do not adequately address cyber exposure.  We would recommend you obtain a quote for a Cyber Liability policy to know what the cost would be to transfer this risk to an insurance company, and then make the conscious decision to either purchase the policy or continue to self-insure the risk.