Cyber Liability Insurance
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What is Cyber Liability Insurance?
Our society is increasingly dependent on technology. This technology connects mass amounts of people and data, which leads to large-scale operational and marketing efficiencies for businesses. Unfortunately, the connected nature of technology creates new risks for businesses as well. Businesses now face threats of data breaches, hacking incidents, network failures and other innovative cyber incidents. Ultimately, your business may be liable if a third party compromises the security and integrity of your data. The prevalence of these threats require businesses both small and large defend their systems and organizations against attack. Here is a list of potential cyber liability risks which would be covered under a Cyber Liability Insurance policy.
Third Party Liability - businesses may be liable for costs incurred by customers, suppliers and other third parties due to a cyber attack or other data breach
System recovery - Repairing or replacing IT systems, including damaged or lost data, leads to significant costs. Following an attack, your business may not be able to operate due to system downtime. This leads to additional losses from business interruption.
Notification expenses - In most states, following a cyber attack that may involve customer data, you must notify customers of the breach. The notification process may be expensive, especially if your business has a large amount of customers.
Regulatory fines - federal and state regulations require businesses to protect consumer data. If a business fails to meet its required compliance duty under the law, which leads to a data breach, then your business may incur substantial fines.
Class action lawsuits – recent large-scale data breaches resulted in class action lawsuits filed on behalf of customers involved in the breach.