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Cyber Insurance Fact Sheet

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Cyber Liability in a nutshell

If your business is targeted by cyber criminals or suffers a data breach, Cyber Liability insurance will assist in managing incidents from the first notification to response management, forensic investigations, recovery and payment of claims.

The low-down

Cyber Liability Insurance is designed to help protect you from claims and support your profitability in the event of a cyber breach or attack. Costs associated with defending a cyber claim are also covered.

It offers cover for both third party claims against your business (such as clients suing for breach of privacy, or action taken by the Privacy Commissioner); and first party cover for the expenses your business incurs following a cyber attack (including the costs of repairing and restoring your systems).

Do you really need Cyber Liability Insurance?

Small businesses rely on the internet more than ever. Whether you’re storing customer information on a laptop or in the cloud, using an EFTPOS machine to collect payments, sending emails to vendors, or simply updating your website, you could be vulnerable to a cyber attack. Internet-connected devices and services might be essential to running your business, but they also create an opening for crafty cyber criminals. And not every incident is as sophisticated as a virus or ransomware. Online thieves often use simple phishing emails or fake invoices to fool you or your employees into giving up login details and passwords or making fraudulent payments. An attack on your business could be a costly experience and has the potential to jeopardise your intellectual property, ruin your reputation and put you out of business.

To understand if a Cyber Liability policy would be beneficial to your business, ask yourself the following questions:

How valuable is your data? Do you store personal or commercially sensitive information about your clients, suppliers or your own business?
How robust is your IT infrastructure? Is it up to date with the latest anti-virus protection software?
Are you and your employees adequately trained on what to be aware of, how to prevent a cyber incident from occurring and recognising when a data breach has occurred?
Do you have sufficient resources and an incident response plan to manage a cyber incident?

Did you know?

From 2020 to 21, cybercrime was on the rise, with nearly 13% more cases reported than in the previous financial year. (Australian Government Cyber Security Centre, September 2021)

Over 60% of Australian SMEs don’t survive a cyber-attack or data breach. (The Australian Small Business and Family Enterprise Ombudsman)

Cyber Liability Insurance

Cyber Liability Insurance is designed to help protect you from claims and support your profitability in the event of a cyber breach or attack.

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Professional Indemnity Insurance

Professional Indemnity insurance is designed for professionals who provide a specialist service or advice, providing protection for financial loss and legal costs of a claim.

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Public Liability Insurance

Public Liability insurance is there to provide protection if someone makes a claim against the insured, the business or its employees.

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Over 60% of Australian SMEs don’t survive a cyber-attack or data breach. (The Australian Small Business and Family Enterprise Ombudsman)

One cyber attack was reported every 8 minutes during the 2020-21 financial year, and they are more substantial than in previous years. (The Australian Cyber Security Centre, September 2021).

What is typically covered?

First Party Costs Covers the costs associated with responding to a cyber incident, including:

IT forensic costs
Data recovery costs
Cyber extortion costs (including ransom demands from hackers)
Notification and public relations costs

Third Party Losses Covers your liability to third parties following a data breach, including:

Claims for compensation
Legal and defence costs
Costs arising from investigations by a government regulator
Fines and penalties for breaching the Privacy Act

Business Interruption Covers lost profits as a direct result of a cyber event:

Loss of income
Business expenses
Increased cost of operating your business

What is typically not covered?

Bodily injury and property damage
Prior known facts or circumstances Intentional or fraudulent acts
Damage to computer hardware
Upgrading of an application, system or network
Failure or outage of power, utilities, satellites or telecommunication services

Always read the Policy Wording to understand the terms and conditions of Cyber insurance cover, including any applicable exclusions.

Claim Case Study

An insured hairdresser used a VoIP telephone system for their business. A hacker gained access to the telephone system and made multiple unauthorised calls to a premium number over the course of a month. At the end of the month, the hairdresser received their invoice which included $30,000 of unauthorised calls.

The hairdresser made a claim on their Cyber policy which triggered the optional Social Engineering cover. They were covered for $30,000 of direct financial loss as a result of the phreaking attack.

*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.

cyber cyber insurance cyber security

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

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