10 Reasons Why You Need Cyber Liability Insurance
Cyber Liability Insurance provides liability protection to the business and organization against cyber threats, attacks, and data breaches. It’s a modern form of business insurance specially designed to help large organizations and businesses prepare for, respond to, and recover from cyber and other digital crimes. Almost all large-scale organizations and industries use digital platforms and information technology to handle their administrative tasks and business operation. Where informational technology and digitalization have made business handling easier, they are also arising unprecedented cybersecurity challenges that are making large organizations and businesses lose millions of dollars every year in terms of data breaches and cyber-attacks, etc.
Although the organization has been using security programs and cyber safety essentials since the start of digitalization, there’s still a gap in financial protection that can compensate for losses and breaches caused by cyber-attacks. Cyber Liability Insurance is formulated to fill this gap that helps organizations and businesses in the reinstatement process after the breach or cyber threat has occurred. It works just like other liability protection coverage as it covers the financial losses stemming from data breaches and cybersecurity events. Cyber Liability Insurance also protects your business against third-party lawsuits and investigations.
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Why need Cyber Liability Insurance?
Cyber Liability coverage has become essential for organizations and businesses because of ever-growing cybersecurity challenges. Most businesses are now working online, and they rely on technology to carry out their business operations. They need this coverage to protect their extremely confidential data such as customers’ personal information, employees’ information, and, more importantly, banking and finance matters. Cyber Liability Insurance offers you’re the peace of mind that your digital, data, and computer system is covered for any sort of financial losses in case of a cyber-attack. Cyber liability coverage is always a great and smart choice whether you’re running a small or large-scale business.
What are the types of Cyber Liability Insurance?
Cyber Liability Insurance doesn’t follow the one-size-fits-all principle; therefore, you must understand the different types of cyber liability coverage before buying it for your business. There’re two major types of Cyber Liability Insurance:
a) First-Party Cyber Liability Coverage
First-Party Cyber Liability Insurance helps organizations and businesses pay the expenses of first-party or direct cyber attacks and breaches. For example, if a cyber extortionist demands ransom from a business in return for the decryption of data, First-Party Cyber Liability coverage will take care of the expenses incurred on the restoration of data for that business.
b) Third-Party Cyber Liability Coverage
Third-Party Cyber Insurance covers you against any lawsuits or legal claims by a third party that was affected by a data breach of your system. For example, if one of your customers files a lawsuit against you because their important information was stolen as a result of a data breach of your system, your cyber liability insurance provider will help you pay legal expenses and defend your case in court.
What Does Cyber Liability Insurance Cover?
The coverages of Cyber liability Insurance depends on the type of insurance policy you’ve bought. In the previous section, you’ve learned about the two major types of cyber liability insurance. Now, it’s time to learn about their coverages.
First-Party Cyber Liability Insurance
First-Party Cyber Liability Insurance provides the following coverage options:
a) Reputation Protection Coverage
A cyber attack or data breach always brings a sharp decline in an organization’s reputation and popularity. Organizations and businesses have to run promotional campaigns to restore their reputation among their customers. Reputation protection coverage compensates the insured organizations for the cost stemming from protecting and repairing their reputation after a cyber attack. The general marketing campaigns and PR efforts are included in this coverage.
b) Software or Hardware damage and loss coverage
Around 70% of cyber attacks cause damage or loss of software or hardware of the computer system. This cyber liability coverage reimburses the insured organizations for the cost of replacing, repairing, and reinstatement of the hardware components or software, such as electronic data that was damaged due to a cyber attack or breach. In most cases, your insurance provider also helps you pay the fee of the technology consultant you hire for the restoration of your computer system.
c) Loss of Income Coverage
It covers the income losses faced by you due to the business interruption stemming from a cyber-attack or data breach. Cyber Coverage Insurance always ensures your business continuity.
d) Notifying Affected Customers Coverage
This coverage helps you bear the cost of notifying your customers that may be possibly affected by a cyber attack or data breach. Some companies voluntarily notify their customers about a cyber attack, while others do it as part of legal compliance.
Third-Party Cyber Liability Insurance
Third-Party Cyber Liability Insurance provides the following coverages:
a) Lawsuits and Legal claims coverage
This coverage helps you defend your case in court and pay the legal expenses if someone from your customers or partners files you a lawsuit or legal claim alleges that the cyber attack or breach is occurred due to your technical team’s failure.
b) Regulatory Fines Coverage
If your organization or business is found guilty of breach compliance regulations or a data breach law and you’re fined, your cyber liability insurance provider will help you pay the penalty costs and expenses of hiring an attorney to defend your case in court.
c) Media Liability Coverage
This coverage protects you against the claims of defamation, libel, invasion of privacy, copyright infringement, and other liabilities.
d) Negligence Claims or Breach of Contract Coverage
This coverage covers your organization against lawsuits and claims accusing your technical team of professional negligence, which could be counted as a breach of contract.
10 reasons why you need cyber liability insurance
As we have discussed the types and coverages in detail, it’s time to analyze the reasons why you need cyber liability insurance.
1. Cyber Liability Insurance offers steadfast protection to your Most Important Asset – Data.
The information and data stored in your computer system and database are one of the most valuable assets of your business; therefore, it’s one of the most prominent targets of cyber attacks and breaches. This data may include the personal information of your customers, which is worth a billion dollars, your banking details, and your employees’ information. General Commercial liability insurances don’t provide coverage for your data, due to which you need an insurance policy specially designed to provide protection to this most valuable asset. Cyber Liability Insurance serves as a watchdog for your data stored in computer servers and databases. In the inevitable circumstance when a breach or cyber-attack occurs, your cyber liability insurance provides financial and professional resources to restore your data.
2. It covers the downtime of your system after a cyber attack or breach occurs.
Proper functioning of your computer system is necessary for your business’s smooth and streamlined day-to-day operations. A cyber attack or data breach can end up your system down, which can interrupt your critical business operations. The downtime (period in which the computer system doesn’t work properly due to a cyber attack) is usually not covered by standard business interruption insurances. However, Cyber Liability Insurance covers the downtime and reimburses you for the income losses stemming from business interruption.
3. Cyber Liability Insurance covers most modern cyber-attacks and breaches.
Standard crime insurance policies and general commercial liability coverages don’t cover the ever-growing modern cyberattacks, threats, and breaches. On the other hand, Cyber Liability Insurance keeps its coverages updated according to the ever-changing cybersecurity pattern. Therefore, getting cyber liability coverage is a good and smart choice that is in the larger interest of your business’s cybersecurity.
4. Your reputation is your valuable asset, so why not insure it with special cyber liability coverage?
The success or failure of any business depends on its reputation. To make your mark in the industry, you establish a good reputation among your customers and secure it from certain reputation risks. A security breach, cyber-attack, or data breach on your business system is nothing less than an onslaught on your professional reputation. Cyber Liability Insurance guarantees the protection of your reputation in the event of a security breach.
5. Cyber Liability Insurance is equally suitable for big corporations as well as small ones.
Recent surveys and research show that cyber attackers are now more inclined towards small corporations than big ones. The reason for this sifting tendency of cyberattacks is because when a large or high-profile organization is targeted by a security or data breach, it’s reported in the media to raise awareness about cybercrimes. As a result, more and more big corporations have started taking cybersecurity as a serious issue. On the other hand, small organizations and companies don’t have enough professional and financial sources to maintain foolproof cybersecurity, due to which they are more susceptible and vulnerable to cyber-attacks and data breaches as compared to large organizations.
Cyber Liability Insurance is specially design to provide sufficient cybersecurity coverage for large as well as small companies and businesses.
6. Cyber Liability Coverage covers your third-party lawsuits and helps you comply with breach notification laws.
After a cyber-attack or data breach occurs in your computer system, you will have to comply with the breach notification laws to get clearance from the authorities. Your customers or partners may file lawsuits against you alleging your technical team responsible for the attack or breach. Handling these matters can cost you a significant amount of time and money. Cyber Liability Coverage covers you for the lawsuits filed against you and legal expenses stemming from complying with the breach notification laws.
7. Cyber Liability Insurance covers your third-party data
Like your business-related data, Cyber Liability Insurance also covers and provides protection for your third-party data that often belong to customers and suppliers.
8. It saves you from severe penalties.
Cybersecurity laws are very strict when it comes to data breaches or cyber-attacks. So, if you are held responsible for a data breach in your computer system, you may be severely penalized. Cyber Liability Insurance saves you from all severe penalties related to cybersecurity laws.
9. Cyber Liability Insurance helps restoration of Your Computer and database system.
Whether it’s a software or hardware loss or damage, Cyber Liability Insurance helps you pay the expenses for the restoration and reinstatement of your system.
10. Easy Claim Filing Process
Cyber Liability Insurance is known for its fast, easy, and precise claim-filing process. Your single application is enough to file a claim with your insurance provider if your computer system is under a cyber attack.
How to get an affordable cyber insurance policy?
You can get an affordable cyber Insurance policy by comparing the quotes from different cyber liability insurance providers. AmTrust Financial is the cheapest cyber liability insurance company that offers cost-effective cyber liability insurance policies for small businesses as well as larger ones.
Cyber Liability Insurance covers organizations and businesses against cyber-attacks and data breaches on their computer and database systems. It has two major types: First-Party Cyber Liability Insurance and Third-Party Liability. Both types of cyber liability coverage offer a wide range of coverage options, from damage or loss to the hardware or software to the repairing and restoration cost of reputation. You can get the cheapest cyber liability insurance by comparing quotes from different insurance companies.