Cyber Insurance

Cyber insurance helps companies respond and recover from expenses resulting from data breaches, ransomware attacks, IT related business interruption events, and social engineering schemes.

This type of coverage was initially created to help organizations respond to data breaches but has evolved over time. Many organizations now purchase cyber insurance more for extortion and social engineering coverage.

Cyber policies are typically comprised of first-party and third-party coverages. First-party coverages offer financial protection for losses the organization directly sustains from a cyber related event. Third-party coverages provide financial protection from fines and lawsuits by third parties.

First-Party Cyber Coverages:

• Incident response costs – Cost of notifying customers who were affected by a breach or incident including the cost of postage, setting up call center and public relations services, and providing free credit monitoring to affected individuals
• Data recovery costs – The cost of working with an IT firm to restore or rebuild data and systems that were impacted in an incident
• Business interruption loss – The reimbursement of net income lost as a result of IT or system outage related to the cyber incident
• Cyber extortion losses – The cost of negotiating a ransom payment and the cost of the actual ransom payment in an extortion attack
• Reputational damage – The cost of public relations services and campaigns resulting from the incident
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Third-Party Cyber Coverages:

• Privacy Liability – Covers defense costs and liability from lawsuits resulting from data breaches and other cyber related events affecting third parties
• Regulatory Defense Costs – Covers the cost of fines and penalties assessed by state and federal governments for privacy law violations stemming from cyber incidents
• Media Liability – Covers defense costs and liability from claims of defamation, libel, slander, associated with publication of electronic and print media. This includes content on a company’s website

We work with a number of insurance carriers who offer cyber insurance. Policies are typically rated on the type of organization (for-profit vs. non-profit, manufacturing vs. e-commerce, etc.) and the annual revenues.

Some traditional property and liability policies will offer a $25,000 or $50,000 limit within an enhancement endorsement. The typical starting limit purchased on a standalone cyber policy is $1,000,000. Some carriers offer a basic policy with $100,000 or $250,000 in coverage. Carriers can typically offer up to $5,000,000 or $10,000,000 on a single policy. If a company needs higher limits of coverage, it is possible to get excess coverage through another carrier.

Technology errors and omissions coverage can typically be offered within a cyber policy if a company needs professional liability for its technology related products and services.

Have any questions or want to discuss cyber insurance in more detail? Let’s chat!