As cyberattacks become increasingly frequent and costly, understanding your cyber risks and protecting your business with sufficient cyber insurance coverage is paramount. Cyber coverage, also known as cyber liability insurance, covers the cost for various expenses that may result from cyber incidents, including data breaches, ransomware attacks, and phishing scams.
In this article, we highlight the importance of cyber insurance by outlining common first party and third-party coverage against cyber threats, to help you better understand the key protections provided by cyber insurance policies.
First-party Cyber Insurance Coverage
First-party cyber insurance can offer financial protection for losses that an organization directly sustains from a cyber incident.1 Covered losses generally include the following:
- Incident response costs— Coverage for expenses related to cyber incident response, including forensic investigations, system restoration, customer notifications, and the establishment of call center services
- Legal costs—Such coverage can help pay for legal counsel to assist with any notification or regulatory obligations resulting from a cyber incident.2
- Data recovery costs—This coverage can help recover expenses related to restoring network security and data that may have been damaged during a cyber incident.
- Business interruption losses—Can help reimburse costs incurred due to the unavailability of IT and computer systems or critical data amid a cyber incident. This can be particularly critical for small businesses.3
- Cyber extortion losses—This coverage can help pay costs associated with hiring cyber security response specialists to evaluate private information recovery and ransom payment demands (if applicable) during a cyber incident.
- Reputational damage—Such coverage can help pay for crisis management and public relations services related to a cyber incident.
Third-Party Cyber Insurance Coverage
Third-party cyber insurance can provide financial protection for claims made, fines incurred, or legal action taken against an organization due to a cyber incident. Often, third-party cyber insurance policies cover:
- Data privacy liability—This can help recover the costs of associated with third parties who had their private or personal information compromised during a cyber incident. These costs may include handling third-party lawsuits or legal disputes, offering credit card-watch services and providing additional compensation.
- Regulatory defense—Such coverage can help pay fines, penalties and other defense costs related to regulatory action or privacy law violations stemming from a cyber incident.
- Media liability—This coverage can help reimburse defense costs and civil damages resulting from defamation, libel, slander, and negligence allegations associated with publishing customer information content in electronic or print media. Multimedia liability coverage can also offer protection amid copyright, trademark, or intellectual property infringement incidents.
Mitigating Financial Losses in the Digital Age: Finding the Right Cyber Insurance Coverage
While specific cyber insurance offerings differ between carriers, it’s clear that cyber insurance can make all the difference in helping organizations avoid large-scale financial losses amid cyber incidents. Yet, the road to selecting the appropriate coverage and navigating cyber liability insurance requirements can be bumpy. It’s best to consult trusted insurance professionals to discuss coverage needs and find a solution that works for your organization.
For more risk management guidance and cyber liability coverage solutions contact MJ today.CONTACT US TODAY
- “Cyber Liability – The Value of Cyber Insurance.” Zywave. Retrieved 2023.
- “Cyber Insurance Coverage Checklist.” Trava. travasecurity.com. Retrieved 2023. https://travasecurity.com/learn-with-trava/articles/cyber-insurance-coverage-checklist-2
- “Cyber Security for Small Business.” Federal Trade Commission. ftc.org. Retrieved 2023. https://www.ftc.gov/system/files/attachments/cyber-insurance/cybersecurity_sb_cyber-insurance.pdf