Guest Spotlight: Cyber Liability Insurance: What it Protects Against

Guest Spotlight: Cyber Liability Insurance: What it Protects Against

Cyber liability insurance is a risk management tool and a form of protection that a business can purchase to limit economic losses from damages and for liability from a potential hacking. Most industries in today’s world conduct a lot of business through computers and the internet. While modern technology helps to promote efficiency and organization throughout businesses, the misuse of the technology poses a threat to private information, which may be seen or used by third parties who should not have access to it resulting in potential liability to the business. On a daily basis, businesses must deal with data security threats, remote and not, of cyber-attacks and potential costs, expenses, and liability stemming from a security breach.

Commercial businesses which primarily publish and collect information via a website may have a higher risk of various legal risk exposures, including from defamation, copyright infringement, and release of confidential information. Cyber liability insurance is important for certain businesses to consider because of the sensitivity of the information stored and transmitted through the internet. For example, businesses that collect customer credit card information and/or store confidential information (i.e. financial, medical, or education materials) have risk. Businesses can choose from different types of policies. For example, breach-notice coverage, privacy liability coverage, and security breach liability coverage.  Breach-notice insurance protects from liability exposures and costs associated with a violation of privacy laws and provide fraud monitoring for customers and clients when confidential information has been compromised.  Privacy liability insurance protects from losses incurred when the personal information of third parties (i.e. customers, clients, vendors) is compromised. Security breach liability insurance covers expenses and losses arising from liability due to viruses and hackings that damage third parties.

In the complicated world we live in, it is essential to protect not only your business, but also all personal information relating to a customer, client, as well as your business and employees. Even though computer software systems and intelligent IT employees can help thwart an attack, breaches occur to the best of systems. Cyber liability insurance can help salvage the cost of the damage and liability after an attack has occurred.


By Christine Malafi, Esq.