Businesses around the world are worried about cyber risks. According to Business Insurance, a 2019 survey from the World Economic Forum found that cyber threats are the number one risk that American and Canadian business leaders worry about. Given this concern, it’s no surprise that interest in cyber liability insurance is increasing. Obtaining cyber insurance is a smart move – but not all policies are the same.
Cyber insurance is still a developing coverage type, and there is considerable variation from policy to policy. While cyber liability insurance provides important coverage, you shouldn’t assume that any given policy will protect you from all risks. Here’s a look at some of the different policy forms available.
Data Breaches and Data Privacy
When business leaders think about cyber liability, many of them probably think about data breaches. With so many high-profile data breaches in recent years, this is understandable.
Cyber insurance can cover many costs associated with a cyber breach, including:
- Consumer notification and compliance with local notification laws
- Forensics investigations
- Lawsuits resulting from data breaches, including defense costs, awards and settlement
Malware attacks are another common type of cyber threat. In some cases, malware may be used to steal data, so malware attacks and data breaches can be connected. Other types of malware, such as ransomware, do not result in data breaches. Despite this, they can still cause significant losses.
Cyber insurance can cover costs associated with malware attacks, including:
- Data loss and restoration
- Business interruption
- Extortion, as often occurs during ransomware attacks
Businesses need to protect their intellectual property. However, the nature of the internet – where sharing material is easier than ever – can make this difficult. Intellectual property disputes can arise in a number of situations that cyber insurance may cover:
- Your company’s intellectual property is misused by another company
- Your company is accused of misusing another company’s intellectual property
- A cyberattack results in a loss to your company’s intellectual property
Many cyberattacks rely on malicious programs, but social engineering relies on people’s trusting nature.
- In business email compromise schemes, fraudsters target individuals within a company and convince them to reveal sensitive information or authorize a wire transfer.
- Deepfake technology may make it easier than ever to trick unsuspecting individuals with realistic but fake videos.
- Cyber insurance may provide coverage for social engineering attacks and other types of cyber fraud.
The Right Coverage for Your Risks
There are many types of cyber insurance available. However, not all policies will offer coverage for all cyber risks. When purchasing cyber coverage for your company, work closely with your insurance broker to make sure that your policy covers your company’s risks. This may include both first-party and third-party losses stemming from multiple types of cyber events.
Emerging technologies will undoubtedly lead to new cyber risks. As a result, cyber policies will continue to evolve, and businesses will need to reassess their needs periodically.
Have questions about your company’s cyber exposures? Contact Higginbotham.