Cyber Liability Insurance
What is cyber liability insurance?
In a nutshell, cyber liability insurance covers the losses relating to damage to, or loss of information from, IT systems and networks.
As we often hear in the news, cyber attacks are a growing threat to business. Web attacks are generally a daily occurrence across the business world – this spans from viruses, hacking and various other breaches of security. With more and more of our personal information being stored online, it’s vital that businesses mitigate their risks by purchasing cyber liability cover.
How can cyber liability insurance protect my business?
In current times, it’s likely that most businesses operate using IT systems and store/record information about their customers.
A UK Government survey taken out in 2014 estimated that 81% of large corporations and 60% of small businesses suffered a cyber breach. The average cost of a cyber-security breach is £600k-£1.15m for large businesses and £65k-115k for small and medium sized businesses. Hence the reason why cyber liability is now becoming more imperative to a business’ insurance protection package.
Many businesses will already have existing insurance policies in place, but these may not cover the cyber risks they face. It may be wise to supplement your existing insurances with cyber cover if you:
- Rely on IT systems and websites to transact business / process card information
- Hold customer information
What is covered under a cyber liability policy?
Most cyber policies cover ‘first party risks’ and ‘third party risks’, explained below. Alongside this cyber liability policies will generally include significant assistance and management of the incident – this can often be essential if there is the potential for reputational damage to the business.
First-party insurance covers your business’s own assets. This can include:
- Loss or damage to digital assets such as data or software programmes
- Business interruption from network downtime.
- Cyber extortion where third parties threaten to damage or release data if money is not paid to them.
- Customer notification expenses when there is a legal or regulatory requirement to notify them of a security or privacy breach.
- Reputational damage arising from a breach of data that results in loss of intellectual property or customers.
- Theft of money or digital assets through theft of equipment or electronic theft.
Third-party insurance covers the assets of others, typically your customers. This can include:
- Security and privacy breaches, and the investigation, defence costs and civil damages associated with them.
- Multi-media liability, to cover investigation, defence costs and civil damages arising from defamation, breach of privacy or negligence in publication in electronic or print media.
- Loss of third party data, including payment of compensation to customers for denial of access, and failure of software or systems