With businesses of all sizes and across all sectors becoming more dependent on technology and online solutions, it’s essential to understand the considerable risks and exposures that come with such changes. While technological advancement can make specific tasks and projects easier, businesses may also become more susceptible to cyber crime. With that in mind, all companies must understand the benefits of cyber liability insurance.
What Does Cyber Liability Insurance Cover?
As its name suggests, cyber liability insurance provides financial protection for policyholders in the aftermath of a cyber incident from which they may accrue losses. This coverage can also help insulate businesses from economic consequences if they are responsible for third-party damages arising from a cyber incident.
Although the specific details of a cyber liability insurance policy may vary, in most cases, they can provide financial assistance for the following:
- Restoration and replacement—If a cyber incident leaves its target’s devices, networks or systems compromised, this coverage can help pay for restoring, repairing or replacing them.
- Cyber extortion payments—Cyber criminals may use ransomware to hold data hostage and threaten to release sensitive information. A cyber liability insurance policy may help recoup payments made in these situations.
- Business interruption—If a cyber incident interrupts or hinders a company’s normal operations, this coverage can help pay for resulting damages, such as lost income, employee payroll and equipment rental.
- Legal costs—This coverage can help insulate a policyholder from legal expenses arising from a cyber incident and may help pay for representation, fines, settlements and court-ordered judgments.
How Much Does Cyber Liability Insurance Cost?
A business’s cyber liability insurance premiums may depend on several factors. Before being able to provide an accurate quote, insurance companies must conduct a comprehensive analysis of various criteria, including the following:
- Type and amount of data being handled
- Number of customers, clients or patients
Who Needs Cyber Liability Insurance?
In today’s day and age, most businesses depend on technology for some part of their regular operations. With that in mind, cyber liability insurance is necessary for most companies’ coverage portfolios. Still, these policies may be of particular importance for the following:
Get the Right Coverage
Regardless of how diligent a business may be in implementing and maintaining good cyber security practices, it may only take a single mistake or lapse in attention for cyber criminals to infiltrate its systems. Fortunately, L Squared Insurance Agency is here to help. Our agents are well-equipped to assess a company’s cyber risks and exposures and craft optimal coverage. Contact us today to get started.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.