Companies now need to take a really close look at options for cyber risk insurance policies due to the number of data breach incidents and related cyber risks continually increasing and harming businesses large and small. News outlets constantly report incidents, often on a daily basis, and government agencies are actively involved in policing corporate response to these types of attacks.
The types and the amounts of coverage available are expanding as the threats become more sophisticated, with policies for “cyber risk,” “information security,” “privacy,” “media liability” and other coverages that for the most part, act in much the same way. But liability, security and technology errors and omissions are the 3 types of OC insurance most businesses need for overall protection. There’s still no standard form on which the insurance industry as a whole underwrites cyber coverage.
First- and third party coverage essential
Many of the cyber policies currently available offer some combination of traditional liability coverage that protects against claims by third parties, as well as first-party coverage protection against losses suffered by the insured.
With different components of coverage available, agents and brokers need to asses your particular needs to secure the exact type of coverage for your situation, but being aware of the differences among policies being offered is critical to maximizing your results from any comprehensive policy purchased.
One important aspect of coverage for most entities is privacy liability as it includes liability to the insured’s customers, clients and employees for breaches of their private information. This should be a major component of liability coverage in case of a data breach, which may prove quite costly to repair the damages this can bring.
There is also substantial variance among cyber policies regarding whether, and to what extent, they’ll provide coverage for regulatory and other governmental actions. Even where covered, some policies may require that the action be initiated by a formal lawsuit in order to trigger any defense obligation.
Another of the major costs related to a cyber crime is the notifying of third parties potentially affected by a data breach. There is an evolving landscape of breach notification laws occurring on a state-by-state basis. Crisis management coverage includes the costs of managing any public relations fallout from data breach scenarios. With so much at stake, you should be considering cyber risk policies from oc insurance as vital coverage against a breach.