What You Need to Know about Cyber Liability Insurance

Does your business handle payment information? Do you use cloud-based software? Do you store sensitive business or personal information on your network? If you answered “yes” to any of these questions, then your organization is at risk of a data breach. Cyber attacks have wide-ranging impacts, and new threats are emerging every day. 

With the average data breach is estimated to cost a business $3.86 million, cyber liability coverage has become an essential part of any organization’s insurance coverage.

What does cyber liability insurance cover?

Cyber attacks come with steep financial costs and potential damage to your reputation. Oftentimes, employees, customers, and vendors are also victims of the data breach. In addition to resolving the cause of the attack, you may incur lawsuits, lost business and high payouts for extortion attempts. 

Ideally, your cyber liability insurance is comprehensive and offers the right coverage to suit your organization. Depending on your policy, your insurance may cover costs for a number of expenses:

• Notification of those affected
• Investigators and negotiators
• Legal expenses
• Public relations response
• Business interruption
• Fraudulent payments
  

It’s possible that these coverages may be spread out across multiple policies. So, it’s important to understand what’s in your policy before you need to file a claim. 

What to do when you after a cyber attack

In the event of a data breach, it’s critical that you act quickly. Not only do you need to secure your systems and data, you also need to prepare for the ripple effect of the attack, which will probably be unlike any other crisis your business has faced. It’s challenging enough to estimate the costs of a more traditional claim, such as a burst pipe. But at least you can see the damage and get a grasp on the assessments made by plumbers and contractors. 

Understanding the costs of a cyber security claim, on the other hand, is a much more complex process, with many questions that must be answered:

• How is your adjuster measuring the scope of the loss? 
• Are there legal reporting requirements, and who is responsible for meeting them?
• What is required of you to address the loss? 
• What is your insurance broker’s role?
• What is the full scope of the breach responses services offered by your insurer?
  

While the insurance company will take on some of the burden of remediating the data breach, it’s important to have clarity on their methods and processes. 

How a public adjuster can help

A public adjuster with cyber liability expertise can offer you support throughout the claims process. By acting as your advocate with the insurance company, a public adjuster can help you understand your coverage, make sure that your insurance company offers fair compensation, and help manage some aspects of the remediation process if needed. 

Because of the challenges of estimating the costs of cybersecurity claims, you may feel particularly reliant on your insurance company to assess your losses. But ultimately, their goal is to look out for their own financial interests. A public adjuster has the same skillset as the adjuster working for the insurance company. But the goal of a public adjuster is to work for you. 

Also, some expenses related to the data breach may be covered by your other policies, such as your property or business interruption insurance. A public adjuster can look at all of your insurance plans to make sure that you’re taking full advantage of all relevant policies. 

Cyberattacks are on the rise due to remote work

When the pandemic forced work, education, and entertainment events to go virtual, it led to a sharp rise in cybersecurity incidents. The FBI reported that they received nearly 800,000 complaints of suspected internet crime, which is 300,000 more than the number of complaints they received in 2019. 

Phishing scams topped the list, with more than 240,000 victims. In a phishing scam, email is used to trick the recipient into giving up sensitive information. The email may appear to be from a bank or payroll system, and will contain a link to a fake page where the recipient may enter their login information or unknowingly download a link to a malicious file. The cybercriminal can then use that information to steal money, monitor the recipient’s computer, or gain access to other information on the user’s network. 

Ransomware incidents are also increasing. With ransomware attacks, hackers take over important systems and hold them hostage until a ransom is paid. Government agencies, hospitals, and other organizations that administer critical services are particularly vulnerable. 

The FBI estimates that ransomware attacks cost victims more than $29 million dollars in 2020, and that doesn’t include lost business, wages, equipment, or third-party remediation services. 

With cyber attacks on the rise, it’s more likely that your organization may face a data breach one day. Having cyber liability coverage is an important part of protecting your businesses from serious financial liability. But you can’t know if you’re getting the maximum benefits offered by your policy unless you have an adjuster on your side. Ironclaim handles cyber liability claims for organizations of all kinds, from government agencies to small businesses. Get in touch with us today for expert guidance on your claim.