Cyber liability is “the risk posed by conducting business over the Internet, over other networks or using electronic storage technology. A “first party” cyber liability occurs when your own information is breached. A “third party” cyber liability occurs when customer or partner information your organization has promised to keep safe is breached.” The most devastating of the cyber liabilities is “third party” liability which can ruin brands and cause million-dollar lawsuits and trigger statutory fines like HIPAA/HITECH’s $50,000 per incident “willful neglect” fine. It seems like every day we read about these types of incidences happening (Target, Home Depot, etc). Cyber liability insurance should be discussed when creating a cybersecurity plan.
10 Reasons to Purchase Cyber Liability Insurance
According to CFC Underwriting there are at least ten reasons to purchase cyber liability insurance. These are:
- Data is one of your most important assets yet it is not covered by standard property insurance policies.
- Systems are critical to operating your day to day business but their downtime is not covered by standard business interruption insurance.
- Cyber crime is the fastest growing crime in the world, but most attacks are not covered by standard property or crime insurance policies.
- Third party data is very valuable and you can be held liable if you lose it.
- Retailers face severe penalties if they lose credit card data.
- Complying with breach notification laws costs time and money.
- Your reputation is your number one asset, so why not insure it?
- Social media usage is at an all-time high and claims are on the rise.
- Portable devices increase the risk of a loss or theft.
- It’s not just big business being targeted by hackers, but lots of small ones too.
Information is often more valuable to criminals than cash, precious metals or diamonds and that is why the criminals are going after it. We’ve all heard the phrase “not if but when” and this may apply to cyber attacks. According to Inc.com, cyber liability insurance is more affordable than you think and it can cover more than you think. A good insurance carrier can perform a vital function for your organization by analyzing the risks the organization could face and helping to set policies and procedures to protect against cyber attacks.
For more information about Directors and Officers Insurance, download 'Guide to Directors and Officers Insurance: Understanding the Basics of Coverage'.