Cyber Insurance

Background

Both small businesses and professional practices are vulnerable to cyber attacks and financial losses.

Commercial general liability policies and traditional property policies will not cover security or privacy breaches. A company can attempt to recover damages from a third party for liability. However, it will prove to be costly and difficult. The preferred method is to insure a small business or professional practice directly with both first party and third party liability coverage.

In addition, companies and professional practices such as legal, financial services, healthcare and other organizations must maintain strict control over client information under HIPAA, PCIDSS, GLBA and other federal and state government regulations.

First Party Protection:

  • Loss of Digital Assets Coverage
  • Business Interruption and Extra Expense
  • Cyber Terrorism
  • Cyber Extortion
  • Security Event Costs

Third Party Liability Protection:

  • Network Security and Privacy Liability
  • Employee Privacy Liability
  • Electronic Media Liability

Also check for these clauses in a Fidelity Bond.

See Clause E and F details

Insuring Cause (A): Employee Theft Insuring Clause (B): Premises Coverage Insuring Clause (C):  In-Transit Coverage Insuring Clause (D):  Forgery Coverage Insuring Clause (E): Computer Fraud Coverage: The Company shall pay the Parent Organization for direct loss of Money, Securities or Property sustained by an Insured resulting from Computer Fraud committed by a Third Party. Insuring Clause (F): Funds Transfer Fraud Coverage: The Company shall pay the Parent Organization for direct loss of Money or Securities sustained by an Insured resulting from Funds Transfer Fraud committed by a Third Party. Insuring Clause (G): Money Order and Counterfeit Currency Coverage Insuring Clause (H): Credit Card Fraud Coverage Insuring Clause (I): Client Coverage Insuring Clause (J): Expense Coverage Policy and Application:

 

Cyber Liability Insurance Coverage Issues:

  • Breach Notice Costs Coverage for direct costs incurred by an insured to provide notice to individuals/companies in the event of a security breach, including expenses to set up a call center and provide credit monitoring services. These costs also include attorney fees and forensic investigation expenses to determine the cause of a breach and whether notice is required under law.
  • Credit card processing companies may require a security investgation and the cost is borne by the business.
  • Damages and Defense Costs Provides coverage for damages and defense costs arising out of lawsuits or claims resulting from a data security breach or an act, error or omission in the rendering of professional technology services. May also include cost of regulatory investigations or actions due to a security or privacy breach.
  • Service Provider Breach –  Provides coverage if the security breach is caused by a third party service provider, such as SAAS or “cloud” processing application provider.
  • Crisis Management, Business Interruption and Data Restoration Covers the costs and expenses of restoring the network back up, running and recovering lost data. Public relations and reputation defense costs are also included.
  • Denial-of-Service Attack –  Covers lost income if operations are shut down by a denial-of-service attack or other type of hacking invasion including attacks at third party service providers.
  • Cyber Extortion – A cyber extortion clause helps to cover the settlement cost and the expenses of a security firm to track down the hacker. Crime Insurance Crime Insurance covers employee dishonesty. However, for third party computer fraud be sure you have coverage for hacker attacks.
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Cyber Attacks Map