Cyber Risk Insurance
Cyber Risk Insurance is also sometimes referred to as Cyber Liability Insurance, or Network Security Liability Insurance. Additionally, many people are confused about whether they need Cyber Risk insurance, Technology E&O Insurance, or perhaps even Media Liability insurance.
Cyber Risk Insurance can include both a Cyber Liability component, and a 1st Party Coverage component. This is similar to many homeowners policies. There is a liability section and a 1st party (property) section. In a homeowners policy, the liability portion might cover you against an allegation that your dog bit someone, while the property section might cover you for a fire in your house. Similarly, with a Cyber Risk policy, Cyber Liability might defend you and indemnify you against liability claims related to your Internet activities, while 1st party coverage might compensate you for lost revenues for the period of time your website is taken down by a hacker and you are unable to take orders.
Cyber Liability Coverage
There are several different components to Cyber Liability coverage. Each insurance company may package these components differently. But generally speaking, you can often elect which of them you wish to include in your coverage.
Most or all of the exposures outlined in our media liability exposures section (go to new economy exposures tab and then to the media liability exposures tab for a definition) can be covered. Generally speaking the goal is to cover content and advertising generated liability exposures.
Copyright and trademark infringement coverage can typically be procured. However, coverage for misappropriation of trade secrets is hard to come by. And patent infringement coverage is only available via an IP insurance policy ( see the Intellectual Property Insurance tab ).
Privacy and Security
This is probably the core coverage provision. It is rare that a cyber risk policy is purchased without having this feature. Most applicants focus on the privacy and security of personally identifiable information of individuals – customers, patients or others. Many overlook the possibility that they could be held liable if a client’s trade secret or other confidential business information is inadvertantly breached. This could range from a customer list to a new chip design. Privacy and Security coverage is sometimes referred to as Network Security coverage.
Errors and Omissions
Often, coverage similar to or equivalent to Technology E&O coverage can be obtained via a Cyber Risk policy. It is very important to compare the coverage provisions when weighing whether to purchase a Technology E&O policy or a Cyber Risk policy with Errors and Omissions coverage.
1st Party Cyber Coverage
1st Party Coverage typically consists of coverage for business interruption and the non-physical destruction of electronic data and resources. Crime losses are usually covered, and losses generated by errors, omissions and program glitches are sometimes covered.
In addition to providing coverage for lost revenues when a company website goes down, coverage can also sometimes be purchased in the event a complimentary business has Internet related problems. For instance, say your e-commerce business is very dependent on another business’s website – it directs traffic to your site for instance – if that company’s site goes down due to a cyber attack by a criminal, or due to an internal error or glitch, your business stands to suffer. Such losses can also sometimes be covered via the business interruption section of the coverage form. (Such losses are sometimes referred to as “indirect.”)
Destruction of Company Data
For example, if cyber criminals were to electronically destroy a portion of your website, 1st Party coverage could potentially reimburse you for the expenses incurred in reconstructing the site, including recovery or recreation of data or computer code.
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