Cyber & Internet Liability

Cyber & Internet Liability
Cyber liability coverage is a relatively new insurance coverage for liability that arises out of unauthorized use of, or unauthorized access to, electronic data or software within your network or business. Cyber liability policies also provide coverage for liability claims for spreading a virus or malicious code, computer theft, extortion, or any unintentional act, mistake, error, or omission made by your employees while performing their job. The typical business insurance policy only covers so-called “tangible” assets and electronic data is not considered tangible under the typical policy definition. Cyber liability insurance fills that gap.

There are some risks that are commonly covered by cyber liability policies; however, cyber liability policies tend to be customized to meet the risk-management needs of the policyholder. Because businesses are unique in many ways, this customization feature allows the insurer to tailor a policy to meet the unique nature of each business. Thus, the type of business operation will dictate the type and cost of cyber liability coverage. The size and scope of the business will play a role in coverage needs and pricing, as will the number of customers, the presence on the Web, the type of data collected and stored, and other factors.

Cyber liability policies might include one or more of the following types of coverage:

• Liability for security or privacy breaches. This would include loss of confidential information by allowing, or failing to prevent, unauthorized access to computer systems.
• The costs associated with a privacy breach, such as consumer notification, customer support and costs of providing credit monitoring services to affected consumers.
• The costs associated with restoring, updating or replacing business assets stored electronically.
• Business interruption and extra expense related to a security or privacy breach.
• Liability associated with libel, slander, copyright infringement, product disparagement or reputational damage to others when the allegations involve a business website, social media or print media.
• Expenses related to cyber extortion or cyber terrorism.
• Coverage for expenses related to regulatory compliance for billing errors, physician self-referral proceedings and Emergency Medical Treatment and Active Labor Act proceedings.

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