Every business today depends on computers to store, send and receive electronic data. Sales projections of the company can contain crucially important data like contingency plans, a range of company documents and tax records. If these information can be lost, stolen, compromised with or damaged due to a security breach, it can prove highly expensive for the company to restore the loss.
A data breach can prove very expensive if it involves third party claims and lawsuits in case of the breaches involving personally sensitive information including security numbers, credit card numbers and health records. When your business purchases a suitable cyber liability policy, you can protect yourself from the costs of data breaches.
About cyber liability insurance
Cyber liability insurance plan can cover a wide range of financial losses resulting from data breaches and other kinds of cyber events. Policies can vary widely due to the fact that most providers of cyber insurance plans use the forms they have developed themselves. Most plans cover both first party and third party coverage.
First party coverage pays for the expenses the firm will incur due to the breach. Third party cover refers to the damages or settlements the business is obliged to pay due to the claims or lawsuits for the injuries ensuring from the company’s activities or failure to act.
A number of cyber liability insurance policies offer a wide range of covers. While some of them are included in the plans by default, some others can be obtained optionally. For each of the covers, a separate limit might apply. Some covers may apply only after the business purchasing the insurance plan has paid a retention or a deductible.
There are several defined terms contained in cyber liability plans. The meanings of such terms are very important since they determine the scope of the cover provided.
Covering the costs of a data breach
Here are some most common kinds of categories covered under a cyber-liability plan. Note that these costs will be reimbursed only after the business has already incurred the expenses from its own pocket.
Data restoration: This cover reimburses the cost of the replacement or restoration of the electronic data, software or the programs that have suffered damage due to a cyber-attack, denial of service attack, viruses, or other kinds of covered risks.
Loss of income: This cover compensates the company for the losses in income suffered on account of a cyber-attack and the extra expenses it will have to bear for restoring the operations after such a shutdown is caused by a cyber-attack, virus, or other kinds of covered risks. Some policies also cover the losses a business suffered due to one of its important vendors shutting down its operations due to a data breach.
Cyber extortion: The purpose of this cover is to pay for the ransom given away to a hacker who has breached a company’s computer system further threatening to damage the data, introduce a virus, initiate a DoS attack, or compromise with the confidential data unless the ransom amount is paid.
The other covers offered: some other covers that come with most cyber liability insurance plans include notification costs and the cost of crisis management.
Buying cyber insurance policies can be done best with the help of knowledgeable and experienced cyber liability insurance brokers to get the maximum benefits from the plans your business purchases.