What does Cyber Liability Insurance Cover?

Oracle RMS FAQ:

What is cyber liability insurance?

Cyber liability insurance, which can also be referred to as data breach insurance or cyber insurance, is a specialised form of insurance designed to protect businesses and organisations from financial losses and reputational damage associated with cyber incidents. Today’s digital landscape is increasingly interconnected, meaning that cyber threats are increasingly prevalent. This type of insurance has become progressively more important for businesses of all sizes – and for businesses of all types.

Cyber liability insurance, in a nutshell, is designed to offer coverage for the expenses and risks related to data breaches, cyber attacks, and general malicious activities that may target a business’ digital assets. Cyber liability goes beyond traditional business insurance policies, like commercial general liability or property insurance, and specifically addresses the complexities and unique challenges that the digital realm has to offer.

The core objective of cyber liability insurance is to aid businesses in managing any potential financial fallout that could result from a cyber incident. Incidents may include things like data breaches, unauthorised access to sensitive information, network disruptions, ransomware attacks, social engineering scams, and more. These incidents can lead to significant financial losses, reputational damage, legal liabilities, and regulatory penalties.

What does cyber liability insurance cover?

As cyber liability insurance is a relatively new offering, policies tend to vary tremendously between insurers. We always highly recommend reviewing your coverage to the finest detail to assess if the coverage your policy provides is sufficient for you. 

Typically, a cyber liability insurance policy will cover the following:

Data Breach Expenses

A data breach refers to the unauthorised access, acquisition, or disclosure of sensitive or confidential information stored electronically. It occurs when a cybercriminal or unauthorised individual infiltrates a computer network, system, or database to steal, manipulate, or expose sensitive data.

Cyber liability insurance coverage helps businesses manage the costs associated with a data breach. It may include expenses such as notifying affected individuals, providing credit monitoring services, hiring forensic experts to investigate the breach, and implementing measures to mitigate future risks.

Data Loss and Restoration

This coverage helps businesses recover lost or damaged data resulting from a cyber incident. Data may be expunged intentionally due to malware corruption or may simply be lost during the recovery process. The process of restoration can be expensive and may involve the cost of data recovery, data restoration, and recreating lost information.

Business Interruption

Cyber liability insurance can provide coverage for income loss and additional expenses incurred when a cyber attack disrupts normal business operations. This can include lost profits, increased operating costs, and expenses related to business continuity planning.

Generally, this works hand-in-hand if you already have business interruption insurance included in your insurance plan. Business interruption insurance may cover during periods of closure for covered losses, so you may not have coverage for interruption without cyber liability coverage.

Cyber Extortion

This coverage assists businesses in dealing with cybercriminals who threaten to release sensitive data, infect systems with malware, or cause other types of harm unless a ransom is paid. It typically covers the costs of negotiating with the extortionists and paying the ransom if necessary.

Legal Expenses

Cyber liability insurance often covers legal expenses incurred due to a cyber incident. This could happen if the breach event resulted in private data being released and customers or third-parties sued your organisation for alleged negligence. Costs that may be covered can include expenses associated with hiring attorneys, defending against lawsuits, and regulatory investigations or penalties.

Privacy and Notification

If personally identifiable information or sensitive data is compromised, businesses may be required by law to notify affected individuals. Cyber liability insurance can help cover the expenses related to notifying customers, including printing and mailing costs, call centre services, and credit monitoring.

Public Relations and Reputation Management

A cyber incident can significantly damage a business’s reputation. Cyber liability insurance may provide coverage for the costs associated with public relations efforts, crisis management, and reputation repair. You may even be provided with access to various resources to help you restore your business’ reputation and be given advice from reputational experts. 

Third-Party Liability

If a cyber incident results in harm to third parties, such as customers or business partners, cyber liability insurance can help cover legal expenses and damages arising from lawsuits filed against the insured business. It can cover attorney fees, administrative costs, settlements, and more. Generally, this goes hand-in-hand with an existing general liability insurance policy.

Cyber liability insurance is a crucial safeguard against the financial ramifications of cyber incidents, but what each policy covers tends to vary. The right coverage can provide your organisation with peace of mind, financial protection, and access to resources necessary for the restoration of your business’ reputation.

Should you add cyber insurance to your business insurance package?

Cyber liability insurance may be added into an existing business insurance package to act hand-in-hand with your property insurance, general liability, business interruption, etc. A cyber attack has the potential to prevent your business from operating as usual, or it could even prevent you from fulfilling your contractual obligations and delivering key services to your customers. For any business that manages any kind of digital assets, we highly recommend the inclusion of cyber insurance – whether you’re a tiny e-commerce store or an IT firm with hundreds of employees.

Oracle RMS has numerous trusted insurance partners who we can find you top quotes from to get you the most fitting cyber liability insurance policy on the market. Reach out to our call centre today or click the link below to begin on your own free cyber liability quote.