Importance of Cyber Liability Insurance

The Importance of Cyber Liability Insurance

A growing number of businesses are operating online, whether it is interacting with customers and potential customers via their social media page or selling online, which puts them at risk of cyber attacks.

Cyber attacks, which include computer viruses, can lead to huge losses for your business if you are not protected. In fact, any business that maintains customer information provides online banking, operates an online store, or collects online payment information, etc. should protect themselves with cyber liability insurance.

Cyber liability insurance, also known as cyber risk insurance, covers property and liability losses that arise as a result of a business participating in electronic and online activities, such as selling online. This coverage not only protects your business from financial loss due to computer related data and security breaches, but it also prevents damage to your business's reputation. Once a security or privacy breach occurs at your company, if it is not handled properly, it can be hard to regain your customers' trust.

Privacy Regulatory Defense and Penalties

Companies are required to act by established identification protecting specifications, legislation, or guidelines, also known as privacy compliance, to protect unauthorized access to personally identifiable information. When this privacy compliance is breached in some way, the company is held responsible.

Businesses are being sued in privacy-related claims even more than ever today. In fact, even the most well-run company can become at risk due to just one mishap in collecting, storing, transferring or disclosing data. Sometimes, it can be just your luck that a hacker hacks into your website and steals password information. Alternatively, perhaps a disgruntled employee decides to divulge personal information to get back at you. Whatever the case, the ramifications of such acts can be serious, including lawsuits, government investigations, heavy fines, and criminal liability.

The privacy regulatory defense insurance covers legal expenses you accrue to respond or defend against a regulatory action stemming from a computer security or privacy breach, as well as fines and penalties determined in the activity, as insurable by law, including customer notification and credit monitoring costs, data recovery, multimedia liability, and data extortion.

Security and Privacy Liability

A security breach occurs when an application or person unlawfully gains access to devices/and or networks, applications, data, or services by bypassing underlying security mechanisms.

A security breach can arise from a number of sources, including malware being downloaded onto your computer. In fact, a hacker can embed malware software onto your computer without you even knowing. When a user visits your site, they are coaxed to download the software for the site to load properly. Once the visitor downloads the malware, it affects the system.

Another way that your security can be breached or data can be stolen from your computer system is physical. For instance, say one of your employees goes on vacation, and accidentally leaves their laptop on the beach. It can fall into the wrong hands and information can be stolen. Alternatively, perhaps you leave your computer on when you go on your break, and someone walks up to it and steals information from your system or plugs in a USB drive with malware on it and physically infects your system.

These are just a few of the ways that your computer system can become vulnerable to a security or privacy breach. Without the proper protection in place, your company can become liable for losses due to the breach.

Security and privacy liability cover defense fees and damage resulting from a lawsuit filed against you due to a computer security or privacy breach, including theft of data from your system, loss of client or employee information, circulation of a computer virus from your system to another's, and violation of privacy and data regulations.

A good cyber risk insurance plan, which includes privacy regulatory defense and penalties and security and privacy liability coverage, can save time and money on penalties and defense costs that incur as result of a security and privacy breach within your company. Cyber crimes are not likely to just go way, in fact, many hackers often reside in a different country, which can make it a bit more challenging to prosecute, so having the proper insurance in place can give you peace of mind knowing you are covered in the event of a cyber attack.

About the Author

Riebling Insurance Agency cyber risk insurance under the Fidelity-Pak Program covers various cyber-related risks to businesses, including privacy regulatory defense and penalties and privacy liability. Learn more by visiting their website.

Additional References

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