The Quick and Dirty Low Down on Cyber Liability Insurance
We recently published an article of our favorite privacy, security, and encription takeaways from #ABATechshow. Lets expound upon another related topic that seems to be popping up recently: cyber liability insurance.
Cyber liability insurance has actually been around since the turn of the century (back then it was called Errors and Omissions Insurance). In the early 2000’s, this kind of insurance was only purchased by big technology companies. It’s only now that other, smaller companies are stepping up to manage the risks associated with data breaches.
Law firms represent a larger conglomerate of companies that are protecting their information with cyber insurance since they tend to keep a lot of private and sensitive data. Contracts, bills, another documents may contain bank account numbers, social security numbers, signatures, etc, which if stolen can lead to identity theft. With recent reports that some major U.S. law firms have been the victims of cyber-hacking, it’s become apparent that no organization is safe from attack. Despite this reality, a large majority of public companies (nearly 65%) have no cyber insurance policies in place, even though these same companies list cyberthreats as the top concern for their firm.
Understanding what cyber liability insurance is and what it covers can help you determine if taking out a policy is the right thing to do for your firm. Let’s break it down:
What is Cyber Liability Insurance, Anyway?
Cyber liability insurance covers a business’ liability for a data breach where a firm’s customer’s personal information (social security, credit card numbers, etc.) is exposed or stolen. Information gets compromised when a hacker or other cyber criminal gains access to a firm’s network.
What Does Cyber Insurance Cover?
Cyber liability insurance cover can include:
- Data breach management
- Multimedia/Media liability
- Third-party damages
- Extortion liability
- Network security liability
Some things that are not covered:
- Reputational harm
- Loss of future revenue
- Cost to improved current technology system
- Lost value on intellectual property
How Do I Obtain Cyber Liability Insurance?
Cyber liability insurance is purchased in the same way that traditional insurance is. Determine what costs or expenses you would like to have covered and what types of incidents you’d like to be covered for.
Next, select a reputable broker to work with. A good specialist will help determine what kind of policy and coverage is best for your specific firm size and practice areas. A knowledgeable broker is likely to know the best products to suit your needs.
In addition to being responsible for the policy itself, insurance companies will work directly with your broker to make sure your needs are met. Choosing the right company will be the difference between having coverage that you can use and coverage that does little or nothing for you in the event of a data breach.
No two firms are the same when it comes to the risks involved and the coverage that is needed. There are very simple policies available for small and medium sized enterprises, but it’s best to do your research before investing in any kind of coverage to mirror your risks.