Business Insurance: Cyber Liability in the Event of a Data Breach
A data breach is “an incident in which sensitive, protected, or confidential data has potentially been viewed, stolen, or used by an individual unauthorized to do so.”
A data breach of your company’s IT system may involve unauthorized people having the ability to view or steal:
- Personal identity information
- Personal health history
- Financial information
- Confidential business communications
- Intellectual property
- Trade secrets
The three primary reasons why information is regularly stolen from (or a virus getting installed into) a hacked computer system are:
- To steal money
- To steal confidential intellectual information and use it for personal gain
- To get attention or to make a point
Data breach insurance or cyber liability insurance is purchased in order to protect your business from these internet-based risks.
Who Needs It?
Almost every business has an entire computer database full of their customers’ personal information which can include names, addresses, birthdays, social security numbers, bank account numbers, credit card numbers, and medical records.
Other information regularly stored online is financial information, personal usage information, confidential emails, and critical company data.
If your company fails to protect itself, its employees, and its customers by taking adequate cyber security measures against data breach, its IT system is at risk of being hacked. In that case, you should strongly consider whether cyber liability coverage is a worthy investment for your business.
What Does It Cover?
Cyber liability insurance coverage can help prepare your business for a potential breach of your data by ensuring the installation of proper security measures are put in place before a breach takes place.
Some examples of these security measures are:
- Identifying and managing company assets that are at risk for being hacked
- Developing appropriate privacy and network policies
- Planning a quick and effective response should a breach take place
- Training management and employees on proper IT security and recovery procedures
By safeguarding both your company’s and your customers’ information and training your employees on what to do should an incident occur, your risk of liability will lower significantly.
Should a data breach or attack actually happen, cyber liability insurance may cover such losses as:
- Data destruction
- Denial of Service attacks (Making a machine or network resource unavailable to its intended users)
Holding cyber liability coverage may also protect your business from the following potential faults:
- Failure to safeguard data
- Errors of omissions
- Lack of regular security audits
Benefits of cyber liability coverage can include:
- Access to regular security audits
- Post-incident public relations expenses
- Investigative expenses
- Criminal reward funds
- A smooth funding mechanism for a recovery from a major financial loss
The impact on a business should a data security breach take place can be exceptional. Not only will your good reputation be at risk but your company may be found to have been non compliant to regulatory requirements and laws which may result in steep fines, penalties, and even lawsuits.