Imagine trying to do business without your computer system or data base.
Scary thought.
Doesn’t matter what industry you are in, when your computer system goes down, business can come to an abrupt stop.
Companies’ increasing reliance on their computer system creates additional risks should there be a data breach from an outside hacker or even a rogue employee. Conventional property and liability insurance coverages will not respond — a new category of coverage called CYBER Liability, aka Network Security and Privacy Liability, is now available in the marketplace to cover this type of risk.
CYBER Liability policies are designed to address first-party risks and third-party liability, usually in the same policy. First-party coverage typically includes (1) data restoration, (2) lost revenue, (3) notification expense, (4)credit monitoring expense, and (5)forensic costs to determine how the breach occurred.
CYBER Liability also provides third-party liability coverage, as insureds are at risk of being sued for allowing, or failing to prevent, unauthorized access to personal and confidential information.
New regulations and legislation make companies responsible for safeguarding sensitive information they collect as part of their operation. Release of this information to unauthorized users create liability and financial risk for companies.
The new reality is that cyber-crooks recognize that a real weakness with today’s companies and organizations lie in their computer’s network security. Sensitive data, inside information and trade secrets have become their prime target.
Since traditional property and liability insurance coverages do not respond to data breaches and privacy-related losses—these new cyber liability policies were created to meet this need.
CYBER Liability insurance has become an important component of a company’s insurance and risk management program along with Workers Compensation, Liability, Property and Auto. The more a business relies on information technology, the more crucial it becomes to protect the network security through insurance and risk management.
Author: Gary J. Uzelac, CPCU, Vice President, Commercial Insurance
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