Cyber Liability
What Does A Cyber Liability Policy Cover?
Cyber Liability policies protect businesses against lawsuits filed by customers or other parties as a result of security or privacy breaches. They cover claims against your business alleging you failed to protect sensitive information stored on your computer system.
A cyber insurance policy also covers the losses due to a threat of extortion and the professional fees related to dealing with the extortion. Network security liability: this may include the third-party damages as a result of the denial of access, costs related to the theft of data on third-party systems etc.
A “first party” cyber liability occurs when your own information is breached. For example, a hack that results in the exposure of your own trade secrets would create a first party cyber liability.
A “third party” cyber liability occurs when customer or partner information your organization has promised to keep safe is breached. For example, a hack that results in the exposure of your customer’s Social Security numbers would create a third party cyber liability.
Companies have compelling reasons to avoid both types of cyber liability, but third party cyber liabilities can be devastating. First party cyber liabilities threaten a company’s competitiveness, but third party cyber liabilities often ruin brands, open the door to million-dollar lawsuits and trigger statutory fines (e.g., HIPAA HITECH’s $50,000 per-incident “willful neglect” fine).
If your company is conducting business over the Internet, over other networks or using electronic storage technology chances are you don’t want to take any chances and not have Cyber Liability coverage.