Evaluating Cyber Liability Insurance Policies
Cyber liability insurance or also known as data breach insurance have been purchased by businesses to help with response costs. Now, it seems they’re purchasing it out of fear of a lawsuit. With many data breach lawsuits making recent headlines, it’s no surprise. Finding the right policy, though, is an important step in being fully protected.
Once you are ready to shop for cyber liability insurance its important to carefully evaluate the purchase of a the cyber liability insurance policy from a variety of angles. The types of coverage offered by cyber liability insurance policies vary dramatically by insurance carrier, so its good to start by talking with a knowledgeable insurance broker who has experience with cyber liability insurance policies.
When evaluating and considering the purchase of a cyber liability insurance policy, there are several important steps prior to actually investing in the policy:
– Determine how much insurance you need and how much risk you can afford to retain. Once the amount of insurance you need is determined, figure out how much you can afford to pay out of pocket before any cyber liability insurance claims may be paid. This will help you determine your retention or deductible.
– Review the types of coverage provided. While cyber liability insurance policies are not standard policies, and vary widely, coverage typically falls into three categories: liability, breach response costs, and fines and penalties. Some things to consider are: Does the insurance carrier have experience with your industry? Is there any special cyber liability coverage applicable to your specific industry or business?
– Know what triggers the policy. Will your cyber liability insurance coverage be triggered for a stolen or lost unencrypted laptop or USB flash drive? Loss related to the failure to secure data? Loss related to a breach caused by a negligent employee? Data held in the cloud? What happens if you experience a data breach in which public data is exposed?
– What types of data are covered? Some carriers specify the types of data covered, while others do not. Some things to consider: How is sensitive data defined in the specific cyber liability policy? Are paper records included?
– What response costs and services are covered in the event of a breach? Most carriers offer coverage for breach response costs and breach services. You will want to check to see if the following are covered (at least) in the cyber liability insurance policy on offer: crisis management and breach notifications, credit monitoring, loss of business income, privacy regulatory defense and penalties, computer forensics investigation, and the hiring of a privacy lawyer.
– Find out if you can select your own vendors or counsel. Often, businesses prefer to select their own vendor or counsel, especially if they have a pre-existing relationship with these professionals. Find out upfront whether or not you have a choice or must use the vendors and/or counsel selected by the insurer as part of the cyber liability insurance coverage.
Cyber risk is now considered one of the top emerging risks a business faces and data breaches will continue to happen. Cyber liability insurance offers a great solution to responding to a breach and helps offer peace of mind if a lawsuit were to happen.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Meena Wahi.