What is Cyber Liability Insurance?

What is Cyber Liability Insurance?

The term "cyber liability insurance cover" is often used to describe a variety of covers - in very much the same way that the word cyber is used to describe a wide range of information security related tools, processes and services.

At the moment, cyber liability insurance cover can include;

  • Data breach/privacy crisis management cover. For example, expenses related to the management of an incident, the investigation, the remediation, data subject notification, call management, credit checking for data subjects, legal costs, court attendance and regulatory fines.
  • Multimedia/Media liability cover. Third-party damages covered can include specific defacement of website and intellectual property rights infringement.
  • Extortion liability cover. Typically, losses due to a threat of extortion, professional fees related to dealing with the extortion.
  • Network security liability. Third-party damages as a result of denial of access, costs related to data on third-party suppliers and costs related to the theft of data on third-party systems.

Some of the elements of a cyber-liability cover may be interconnected or overlap with cover from existing products, including those for business continuity and professional indemnity. Even if this overlap does exist, a good cyber liability policy will ensure cyber risks are fully catered for.

Why do I need Cyber Liability Insurance?

As a business of any size, it is likely you will rely on information technology (IT) infrastructure to some degree.  If so, you will be exposed to the risks of business interruption, income loss and possibly reputational damage if IT equipment or systems fail or are interrupted. The true cost of cyber-crime has been estimated to be on average £300-400 billion a year. Hackers are always on the lookout for weak points in a security system and no single technology exists that will prevent a cyber-attack and, even if there were, there is always likely to be an unavoidable lag between the onset of new threats and the development of new technology to prevent it. The UK government estimated that 93% of large corporations and 76% of small business suffered a cyber-attack in 2012; and the Association of British Insurers advises firms that specialist cyber risk policies are needed to complement existing insurance policies to provide adequate cover for such a loss.

Managing Cyber Risks

As well as putting sufficient insurance in place, it is important for you to manage your own cyber risks as a business.  This includes:

  • Assessing first and third party risks associated with the IT systems and networks in your business
  • Evaluating the potential events that could cause first or third party risks to materialise
  • Analysing the controls that are currently in place and whether they need further improvement   

More information on controlling cyber risks can be found in the following guides:

What to do next?

We have a team of experienced insurance professionals who would be happy to talk to you about managing your Cyber Risk. If you would like to discuss further then please give us a call.

Call 01789 761670

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