In the digital world, even a single stolen laptop or a network breach can expose all your clients' personal data. Just as you protect against traditional risks, safeguarding against cyber threats is equally as important. Cyber risks and data breaches are typically not covered under standard legal professional liability policies, highlighting the necessity of a separate cyber liability policy.
Benefits of Cyber Liability Coverage
Cyber liability insurance is tailored to protect against the specific risks associated with digital operations. It not only helps in managing the fallout from data breaches, such as client notifications and lost income, it also supports the recovery of stolen or lost data.
The coverage needed varies based on your firm’s operations and exposure level, making it crucial to choose a broker who can tailor your policy to your specific needs.
What Your Cyber Policy Should Cover
When discussing your cyber liability policy with your broker, make sure it includes these coverage options, if applicable to your firm:
First-Party Coverage. Offers financial protection for losses your business sustains directly from a cyber incident. Types of first-party coverage include:
- Incident response costs: helps pay the costs associated with responding to a cyber incident. These costs may include utilizing IT forensics, hiring external services, and restoring damaged systems.
- Data recovery costs: can help recover expenses related to reconstituting data that may have been deleted or corrupted during a cyber incident.
- Business interruption loss: this coverage can help reimburse lost profits or additional costs incurred due to the unavailability of IT systems or critical data amid a cyber incident.
- Contingent business interruption loss: can assist with expenses stemming from business interruptions caused by a third-party cyber incident (e.g., a supplier, vendor, or utility).
- Cyber extortion: helps pay costs associated with hiring extortion response specialists to evaluate recovery options and negotiate ransom payment demands (if applicable) during a cyber incident.
- Reputational damage: helps recover lost revenue related to higher customer churn rates and reduced sales resulting from poor publicity following a cyber incident.
- Financial theft and fraud: can help reimburse direct financial losses stemming from the use of workplace technology to commit fraud or theft of securities, money, or other property.
- Physical asset damage: can help with expenses resulting from the destruction of hardware or other physical property due to a cyber incident.
Third-Party Coverage. Provides financial protection for claims made by customers, vendors, or partners who are affected by a cyber incident within your business. Types of third-party coverage include:
- Data privacy liability: helps recover the costs of dealing with third-party individuals who had their information compromised during a cyber incident. These costs include notifying impacted individuals, offering credit-watch services, and providing additional
- Regulatory defense: can help pay fines, penalties, and other defense costs related to regulatory action or privacy law violations stemming from a cyber incident.
- Multimedia liability: this coverage can help reimburse defense costs and civil damages resulting from defamation, libel, slander, and negligence allegations associated with the publication of content in electronic or print media. Multimedia liability coverage can also offer protection amid copyright, trademark, or intellectual property infringement incidents.
- Network liability: can help recover expenses related to third-party liability concerns that may arise from a cyber incident affecting IT networks. Network liability coverage can also provide protection if cybercriminals pass through IT networks to attack other parties (e.g., customers, investors, or suppliers).
- Technology errors and omissions liability: reimburses costs associated with third-party claims alleging technical service or product failures, including claims filed in response to a cyber incident.
Making Cyber Liability Insurance Affordable
While cost is a concern when acquiring new insurance, several strategies can help reduce your premiums:
- Install and regularly update anti-virus and anti-spyware software on all business computers and mobile devices.
- Maintain a secure firewall for your internet connection.
- Conduct regular risk assessments.
- Use robust, regularly updated encrypted passwords.
- Train your employees on cybersecurity principles and establish a comprehensive written IT policy.
Remember, even the best computer security can be breached. But conducting risk assessments will help you identify anticipated threats and be prepared to respond and recover. Taking steps to establish a cyber security program, including purchasing cyber liability insurance, is an effective way to protect your firm.
If you have any questions about cyber liability insurance, don’t hesitate to reach out to me!
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