Cyber Liability

cyber liability


In 2008, U.S. Homeland Security Secretary Michael Chertoff named Cyber Security one of the nation’s four priority security issues, yet many companies remain vulnerable to the financial loss resulting from a cyber-breach.

Cyber Liability provides coverage for any organization that uses technology to do business. This includes companies that collect credit card information for online sales and maintain a large data base of personal information for lead generation, or small businesses that may only maintain sensitive digital information for in-house employees. The amount of coverage an organization needs depends on the level of risk.

There are two major types of Cyber Liability Insurance: 

First-Party Coverage and Third-Party Defense and Liability Coverage. 

  • First-party coverage offers financial compensation that helps to address immediate customer and business needs,
    such as those resulting from an in-house IT network going down.
  • Third-party coverage protects a company’s assets in the event of a lawsuit brought by a customer or partner for a
    data breach that the business’s actions or negligence allowed.

Depending on a company’s specific needs and level of risk, they may choose either or both types of coverage.

Typically, a general liability policy does not cover losses incurred because of the Internet. A cyber liability policy can close the gap when damage or theft of digital property or litigation arising from a cyber-event occurs. 


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