Cyber liability insurance offers essential coverage for businesses that send, receive, or store electronic data. If your business loses important data due to a security breach, it can be costly to restore, and you may be subject to third-party claims and lawsuits. But understanding what your cyber insurance policy does cover is just as important as understanding what it doesn’t.
So What Does Cyber Insurance Not Cover?
Depending on the nature of the claim, your cyber insurance policy may not reimburse you for the costs that arise after you lose important data or information. Cyber liability insurance may not cover losses resulting from hardware failure, IP theft, and more.
Here is everything you need to know about what cyber liability insurance does and does not cover.
What is Cyber Liability Insurance?
Cyber liability insurance covers businesses against financial losses that occur due to data breaches and cyber security threats. This includes the costs required to recover from the data breach and the legal expenses that may arise if a claim is made against your business.
Cyber insurance policies often include both first-party and third-party claim coverage. First-party coverage pays for the expenses your business incurs as a direct result of the data breach or security incident, while third-party coverage pays for damages or settlements you incur due to claims made against your business after the incident.
Cyber liability insurance is essential for any business that deals with sensitive data and information — not just tech companies. Small businesses, in particular, are often more vulnerable to cyber security threats, as they don’t have the large IT departments necessary to protect their systems against breaches.
What Does it Cover?
Cyber liability insurance can cover a wide range of expenses that result after a data breach.
Common first-party coverages include:
- Data restoration: Covers the cost of restoring data lost during a breach.
- Crisis management: Helps pay for crisis management, including hiring a PR expert, attorney, or forensic accountant.
- Loss of income: Covers lost income in the event that your business is forced to temporarily shut down after a cyber attack,
- Extortion: Helps cover ransoms paid to hackers who have stolen data and are using it to extort your business.
- Notification: Covers the costs necessary to notify all parties impacted by a data breach.
Cyber liability insurance also typically helps businesses pay for expenses that arise after a third-party claim is made against them, including settlements, defense costs, and other legal expenses. Claims covered by cyber insurance may include negligence, errors and omissions, defamation, invasion of privacy, and more.
6 Things Cyber Liability Insurance Does Not Cover
While cyber liability insurance offers comprehensive coverage for your business to protect it against financial losses due to data breaches, there are many situations in which it won’t help you cover expenses after a data breach.
Here are six things your cyber liability insurance policy may not cover:
- Bodily injury and property damage claims: Cyber liability does not cover claims of bodily injury or property damage. Businesses need general liability insurance to protect themselves against these claims.
- Intentional and dishonest acts: If data is lost due to intentional or dishonest acts committed by your business, cyber insurance will not cover the damages.
- Loss of property: Loss of property, like losing a computer, cell phone, or another electronic device that stores sensitive data, may not be covered by cyber insurance. Instead, loss of property is typically covered by commercial property insurance.
- Criminal activity: Cyber liability insurance typically doesn’t cover criminal acts, including employee theft, fraud, or robbery.
- Utility failure: Cyber insurance may not cover damages or data losses that result due to utility failures.
- Social engineering: Cyber criminals often obtain sensitive data and information via social engineering rather than hacking. Depending on your policy, you may not be covered against damages caused by social engineering.
Business owners should carefully review their cyber insurance policy to understand what is and is not covered so that they can fill these coverage gaps with other policies as necessary.
How Much Does Cyber Insurance Cost?
The cost of cyber liability insurance varies based on several factors, including:
- Coverage limits
- How many employees can access company data
- Security measures (e.g. antivirus software)
- Claims history
A KSA Insurance agent will work with you to find a cyber liability insurance policy that is tailored to your company’s needs without exceeding your budget.
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Cyber insurance offers necessary coverages for any business that handles sensitive data and information. If your company experiences a data breach, cyber insurance can help pay to recover your data and defend against claims.
At KSA Insurance, we work with businesses in South Carolina and across the southeastern United States to help them find affordable cyber liability insurance policies that protect them against data breaches and cyber attacks.
Contact us today to request a quote and learn more about what cyber insurance does and does not cover.