What is Cyber Liability Insurance?
There are many terms to describe the same exposure: Cyber Liability, Privacy Liability, Security & Privacy liability, Data Breach, Network Security, and Cyber Security Insurance all refer to the potential exposure for a data breach. A data breach can occur when personally identifiable information is compromised by hackers, a faulty transaction, malfunctioning technology, simple human error or lost data. These costs can be heavy and require expertise to identify. Security and Privacy Liability Insurance, also known as Cyber Liability, protects businesses against this time and costs associated with these breaches.
The effect of a data breach on your small business could be devastating. You will have to pay to notify the affected individuals as well as the potential expenses arising from credit monitoring, identity theft resolution, analysis into how the data breach occurred and any steps needed to avoid another occurrence
Why Have Cyber Liability Insurance?
Data breaches occur every day and their effect on small business is devastating. Insureds will have to pay to notify all affected inviduas as well as the potential expenses arising from credit monitoring, identity theft resolution, research, and steps for mitigation.
- 40% of the data breach cases are from people making mistakes, such as losing laptops and flash drives.
- 36% are system glitches, such as software updates, which inadvertently expose sensitive private files.
- 24% are malicious and criminal attacks.
No matter the sophistication of the security system, there is little that can be done to eliminate the risk of human error. A common, accidental breach is a real business risk worth considering today.
Cyber Liability Claims Example
Donna owns an insurance agency that is not paperless. Last summer, she hired interns to scan all papers electronically and input them into her new agency management system. Later, some insureds became victims of identity theft and were forced to pay for their own credit monitoring. When some larger clients were affected, an investigation was conducted. It was later found that an intern had stolen the personal information on the applications and sold the identities online. The victims of the breach sued the agency for costs incurred: investigation, cost of credit monitoring, recovery of lost funds, and expenses to clear the stolen identities, totaling over $1.3 million.