Cyber Liability Insurance was designed to cover consumers of technology products and services. The policy has evolved into a package that provides protection for liability and property losses that can result when your business is involved with selling on the internet or collecting sensitive consumer information.
In today’s economy, it is unusual for a business not to use computer technology or the internet in any facet of their operation. The risk of a data breach has become more prevalent as more and more data is collected, and hackers become more and more sophisticated in their unlawful activities.
In response to the increased instances of data breaches, 47 states and the District of Columbia have enacted legislation that requires private or governmental organizations to notify individuals and vendors of security breaches of information that involves personally identifiable information. These laws typically contain provisions regarding who must comply, the definition of “personal information”, what constitutes a data breach, and the requirements for providing notices. This legislation puts the responsibility on the business owner to pay all costs for providing notifications and preventing the breach from happening again.
Although Cyber Liability Insurance is similar to Technology E&O coverage, the Cyber Liability policy has evolved as technology evolves to provide coverage needed in the 21st century:
• Third party professional liability coverage that is found in Technology E&O coverage.
• Privacy Liability – Covers the loss of personally identifiable information (sensitive information) for customers and employees.
• Security Liability – Provides coverage if your business is accused of failing to prevent the spread of a hacker or virus attack.
• Website Media Liability – Provides coverage if your business is accused of libel, slander or copyright infringement as a result of your website content.
• 1st Party Cyber Extortion – Reimburses for expenses required to respond to the threat of damage or release of your data and provides funds for possible ransom demands.
• 1st Party Privacy Breach Response – Pays for the expenses associated with meeting regulatory requirements in the event of a breach of sensitive information.
Since Cyber Liability policies are evolving as technology threats evolve many insurers offer different packages of coverage that may include all or some of the coverages listed above. It is incumbent upon every business owner that uses technology in the course of business to seek the advice of an experienced agent or broker to make certain the business or organization is properly protected.