With the average data breach costing businesses upward of $4 million, it's more important than ever for businesses to have robust cybersecurity plans.1 And in most cases, this means having a cyber liability insurance policy to protect the business, its vendors, and its customers from the damage a data breach can cause.
Traditional property and liability insurance policies don't always cover data breaches, and relying on these basic insurance policies to protect your business could leave you—and anyone else affected by the breach—out in the cold.
Here we discuss five key ways that cyber liability insurance can help protect your business.
First-Party Coverage: The Business Itself
Cyber liability insurance provides for direct payments to your business to cover the cost of:
● Lost or damaged data
● Loss of business income
● Costs to notify customers of the data breach
● Crisis management costs
● Costs associated with cyber extortion
This coverage is designed to put your business back where it was before the breach occurred—without requiring payment out of pocket.
Third-Party Coverage: Vendors, Employees, and Customers
This coverage protects your company against any claims that could be made by other parties injured by the cyber attack: vendors, clients, employees, and customers. This coverage protects against:
● Claims that your business failed to adequately protect customer or employee data
● Claims stemming from private data that was breached and then published on the internet
● Fines and penalties levied against your company for violation of data security laws
Lost Data Coverage
No matter where your company stores data, it's responsible for this data—and cyber liability coverage helps protect you from liability if a data breach exposes personally identifiable information or protected health information. These policies can cover everything from breach notification to remediation expenses to the costs associated with working with regulatory investigators.
Lost Device Coverage
With an increasing number of employees working fully remotely or on a hybrid schedule, mobile devices like laptops and tablets can be more vulnerable to theft. Cyber liability insurance can cover network and information security liability—not only will it pay for the lost laptop or tablet itself, but it can also pay for any legal and investigative costs incurred in locking down the data that laptop contained.
Forensic Investigation Coverage
Because of the costs and hassle associated with data breaches, companies that have gone through this process even once want to do everything within their power to avoid it in the future. Forensic investigations can help identify what caused a breach and what information was compromised, allowing you to notify those affected while protecting your systems against future breaches.
A cyber liability insurance policy can cover the cost of forensic research, as well as any business losses or other expenses incurred while the forensic investigation is ongoing. The cyber liability insurance company may even have its own cyber security and risk management experts who can work with you to protect the important data you keep.
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual. To determine which liability insurance may be appropriate for you, consult your financial professional prior to purchasing.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05345915.
1 What is the Cost of a Data Breach in 2022?, UpGuard, https://www.upguard.com/blog/cost-of-data-breach