Cyber Liability / Data Breach Insurance

cyber liability insurance
Data Breach Insurance

Cyber Liability is a type of insurance designed to protect business owners from a variety of risks associated with the transaction of business online and the storage of private data in a computer system or network.  Any business that maintains a website, stores customer data, or conducts financial transactions on a computer or network has an exposure to this type of loss.  If private data entrusted to you is lost or stolen your business can face tremendous costs associated with investigating and resolving the breach, not to mention notifying any customers who were potentially impacted.
While large companies tend to dominate the headlines when they experience a breach, these losses increasingly impact businesses of any size and any industry.  Over 60% of all breaches reported occur in small and medium-sized businesses.  Standard business insurance policies do not include coverage for damages to intangible property or liability resulting from a breach of privacy or data security.

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While there is no standard Cyber Liability policy form – most policies provide coverage for one or more of the following:

  • Data Privacy Liability (covers loss or theft of personally identifiable customer or employee information)
  • Network Security Liability (covers failure to prevent the spread of a virus or malicious electronic attack)
  • Media/Website Liability (covers you for things like libel, slander, and intellectual property infringement in your online posts/website)
  • Electronic Extortion (protects against threats to lock/destroy/release your data)
  • Breach Response (covers the costs associated with a breach – customer notification, credit monitoring, computer forensics, legal expenses)
  • Electronic Business Interruption (lost sales and downtime while a breach is resolved)
  • Regulatory penalties and legal defense expenses (defense of lawsuits and fines/assessments levied by various agencies)

Average per-record cost of a Data Breach according to the 2015 Ponemon Institute Study.


of all Data Breaches involve Small Businesses (fewer than 250 employees) – according to Symantec’s 2014 Internet Security Threat report.

“There are 2 types of businesses – those that have suffered a data breach, and those that have not yet discovered the breach.”

How Much Does a Data Breach Cost?

The most recent Ponemon Institute study estimated the cost of a Data Breach at $154 per record compromised.  Even with a modest customer list the cost exposure for your business can quickly reach six-figure totals.

The frequency of Data Breach events is increasing every year.  Most IT security experts indicate that it’s not a matter of if your business will experience one – it’s a matter of when.  Surviving the potentially catastrophic cost of a breach is a matter of proper planning, maintaining data security best practices, and ensuring that you have the right Cyber Liability policy in place for the worst case scenario.

Despite every statistic to the contrary the current reality is that many business owners still see cyber crime as only a very remote possibility or something that only happens to giant corporations.  They don’t realize how frequent this type of crime is, or that the resulting loss is typically not covered under a General Liability policy.  Don’t let your business become a statistic!  We can help you identify your exposure and secure affordable cyber liability coverage today.

First Party Costs

Common First Party costs associated with a Data Breach:

  • Legal Advice – Cost of hiring an attorney or specialist to determine your notification and regulatory obligations.
  • Notification Expenses  – Includes impacted clients, as well as government and regulatory entities as required by law.
  • Credit Monitoring Services – It is often strongly encouraged to offer some form of credit monitoring or identity theft protection to impacted customers.
  • Business Interruption – Network and employee downtime related to an attack.
  • Crisis Management – Hiring a PR consultant/firm to help mitigate damage to your brand and brand image.
  • Computer Forensics – Hiring an independent IT expert to analyze your system to determine the cause and extent of a breach.
  • Cyber Extortion – Payment of an extortion demand based on the destruction, encryption, or release of sensitive data.
Third Party Costs

Common Third Party costs associated with a Data Breach:

  • Legal Defense Costs – Defending lawsuits filed against your business for failing to protect private information.
  • Settlements and Judgments – Payment of third party court awards and out of court settlements related to privacy liability.
  • Card Replacement Costs – Liability to a bank for the cost to reissue payment cards to impacted individuals.
  • Regulatory Fines and Penalties – Fines assessed by State and Federal entities or Payment Card Industry (PCI) fines.
  • Electronic Media Liability – Infringement of intellectual property, copyright/trademark infringement, libel and slander in online communications.
  • Network Security Liability – Failure to prevent the transmission of a computer virus or malicious code.