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.