Cyber liability insurance has been around for more than 25 years, however only in the last decade have insurance companies been tasked to redefine the coverage they offer to better protect consumers. The reason for this is simple. The language of old preexisting policies failed to adequately protect a very important asset: membership databases. It also left companies to pay the high cost of recovering from a security breach.
Today, as more companies acknowledge the very real threat of hackers, cyberterrorists, and even internal security breaches, they seek clearer policies with specific wording that protects valuable company data. If you have a preexisting policy that you think covers the loss of corporate data, you should take a look at the following little-known facts about cyber liability insurance to see if you need to make some changes.
1. Modern Cyber Theft is Not Automatically Covered in Old Policies. Two decades ago cyber crimes involved the theft or destruction of tangible property and overt acts that breached company security. They were generally covered under a company‘s theft and vandalism coverage. Today, cyber theft is a separate crime that requires cyber liability insurance in order to provide adequate coverage for all the potential losses that can result from this very specific type of crime.
2. Old Policies Do Not Cover Expenses Associated with Cyber Crimes. The cost of a data breach extends well beyond the loss of data. In 2010, the average data breach costs a company $7.2 million. Included in those uncovered expenses are things like:
– Incident management
– Investigation and remediation
– Legal expenses
– Regulatory Fines
– Mandatory notices to impacted parties
– Third-party damages to injured parties (i.e. class action suit)
A modern cyber liability insurance policy will offer coverage for the loss of data as well as the expenses that come with mitigating a security breach. Talk with your broker to determine whether your existing policy protects you adequately.
3. Cyber Liability Insurance Policies Require a Specialized Broker. Working with a broker who does not specialize in cyber liability insurance can result in you receiving a policy that offers too little or too much coverage for your company‘s needs. If your existing broker does not have significant experience in providing this type of coverage, it is best to work with someone who does to avoid major headaches down the road.
Now that you are aware of these three little-known facts about cyber liability insurance, do you still feel confident that your company is protected in the event of a cyber attack? If not, talk to your broker today about getting the coverage you need.