Cyber Insurance
Cyber insurance generally covers your business’ liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver’s license numbers and health records.
Causes of data breaches include:
- Malware and viruses
- Phishing scams
- Application vulnerabilities
- Weak passwords and other employee errors
- Insider attacks
Cyber insurance typically helps with costs that can include:
- Attorney’s fees
- Court-ordered judgments
- Settlements
- costs associated with legally mandated notifications for notifying affected customers
- Data recovery
- Damage control, like a PR campaign
- Credit and fraud monitoring services for affected customers
- Data breach source investigations
- Ransom demands from cyber extortion
- Business disruption
- revenue loss
- equipment damages,
- forensic analysis
- Restoring personal identities of affected customers
- Recovering compromised data
- Repairing damaged computer systems
First-party cyber liability insurance
Technology companies that handle sensitive client or customer information should consider first-party cyber liability insurance, which covers data breaches on your own systems.
Third-party cyber liability insurance
Third-party cyber liability insurance covers data breaches on clients’ systems that you worked on or for which you are responsible. IT consulting businesses, cybersecurity businesses, and other companies that recommend software or manage network security should buy this policy. Third-party cyber coverage is also crucial for providers of technology services or software.
Cyber Liability Insurance – Costs
The average cost of a data breach is about $250 per record lost. A business with a few thousand customers could face hundreds of thousands of dollars in costs. Most small tech companies purchase a cyber liability insurance policy with a $1 million per occurrence limit, a $1 million aggregate limit, and a $1,000 deductible. Independent contractors often don’t need to carry first-party cyber liability insurance since the policy is limited to data breaches that occur on the policyholder’s network. But contractors may need third-party cyber liability insurance to protect themselves from lawsuits. Cyber liability insurance gives client financial peace of mind since it reassures them you can pay for a cyber liability lawsuit if your work results in a data breach. Client contracts most often require a $1 million per occurrence limit.
