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What is Cyber Liability Insurance?
Last week, I discussed statistics from a recent survey conducted by the Ponemon Institute. The study found, among other things, that a staggering 43% of companies have experienced a data breach in the past year. With statistics like this one, it is no surprise that insurance companies are now protecting businesses from the losses sustained in a breach by offering cyber liability insurance. The financial burdens, reporting obligations, and need to update or secure a system after a breach can be devastating for a business. Cyber liability policies can be integrated into current risk management programs to address what could be a potentially crippling cyber liability claim.
Cyber liability insurance, also known as data breach insurance, provides coverage after the theft or loss of both first-party and third-party data. For first-party coverage, an insurer may cover expenses related to notifying clients that their information was compromised or exposed, purchasing credit monitoring services for customers affected by the breach, or launching a public relations campaign to restore the reputation of the company. Third-party coverage, on the other hand, may cover claims arising out of unlawful disclosure of a third-party's information or infringement of intellectual property rights.
If you are evaluating cyber liability coverage for your business, know that the application process is critical. Most cyber insurers will need to know detailed information about your current data protection system, policies and procedures, and the kind of information accessed by your business. You will want to provide thorough and comprehensive answers, so that coverage is not denied in the event of a breach.
At McBrayer, we can help you assess your risks and better understand the potential liabilities. Each business's information is unique and, depending on the kind of information it handles, will trigger different obligations and reporting requirements. We are here to assist you not only in the aftermath of a breach, but also help you to be prepared for one. If you have questions about data breach policies or how to better protect your business, contact us today.
This article is intended as a summary of federal and state law and does not constitute legal advice.