Cyber Insurance – Key Coverage Areas

General liability insurance for businesses mostly covers physical risks like property damage or bodily injury. Cyber insurance is different in that it addresses the unique risks facing the digital world and companies that rely on computers to successfully operate. A standard cyber insurance policy covers elements that are not normally included in business liability policies such as data breach costs, liability for third-party damages, and legal expenses. Let’s break down the key coverage areas for cyber insurance that could mean the difference between recovering from a cyber attack and closing up shop.

Direct Costs (First Party Coverage)

After a cyber incident, many direct costs could negatively impact your organization such as data recovery costs, system repairs, and/or the cost to pay the ransom as experienced in a ransomware attack.

Notification Expenses

Identifying and notifying clients and customers whose financial or sensitive data was accessed is a key step to rectifying a cyber incident. These notifications can be expensive and time-consuming. Part of the notification typically includes offering individuals whose data was compromised free credit monitoring for a certain amount of time and ID Theft Repair, which is also an expense covered through cyber insurance.

Legal Fees

The legal aftermath of a cyber attack can be complicated and costly. Cyber insurance can cover the legal fees that may pile up in the form of settlements and lawsuits from clients or customers.

Regulatory Fines

Many industries, including the legal and healthcare fields, have compliance and regulatory bodies that may impose fines if it is determined that they did not comply with privacy rights. Cyber insurance may help cover these expenses.

Reputation Management

Cyber attacks cause negative consequences that go far beyond the cost of repairs, restoration of data and legal fees. It often causes a blow to an organization’s reputation. If clients and customers are questioning your cyber security strength future customers may stay away. A public relations firm and a crisis management team may be needed to help restore your good reputation.

Forensic Expenses

If a cyber attack is difficult to identify and contain, an experienced IT forensic team may be needed to support your IT department in identifying the vulnerability and containing the issue. This step in the recovery process can also be costly, but it is often covered by a cyber insurance policy.

Third-Party Coverage

In addition to covering the basic costs of a data breach, cyber insurance policies may offer third-party coverage. This means that the policy may help cover third-party claims, such as those from vendors or partners who may have been impacted by the incident. While the scope of coverage can vary greatly from one carrier to the next, most insurance carriers (that offer cyber insurance) will include some coverage for all of these components. For more information on the depth and type of cyber insurance your organization may need, contact us at Spectra Networks.