Why You Need Cyber Liability Insurance

No matter what line of business you’re in, you probably have one thing in common with other businesses: Most businesses benefit from information databases, communicate via email, and handle other tasks on a computer – online or offline.

Technology allows businesses to communicate with customers as never before and to work more efficiently than ever. But that efficiency comes with a price – major security issues. Even the U.S. government is taking new measures due to an increase in cyber attacks; between 2006 and 2010, computer security breaches increased by a whopping 650 percent, and they have increased since.

Risks include

• damages from unauthorized access to computer systems by third parties
• disclosing or misusing private information, whether this is committed by the business or because the business failed to protect against unauthorized individuals obtaining this information
• transmitting a computer virus or sending an email that causes a crash
• defense and damage costs from alleged copyright, trademark, title or slogan infringement
• defense and damage costs from charges of defamation, libel or slander caused by emails, website or blog content, or postings in online forums

While this is scary, you have options: cyber liability insurance (also called technology errors and omissions insurance).

What does cyber liability insurance cover? Like all insurance policies, options vary, and each business’ requirements are different. The important thing is that you get the right coverage for your needs. Cyber liability insurance typically provides coverage in six main areas:

• Business interruption – If your company is the victim of a cyber crime, this covers revenue losses whether you experience a temporary shut-down or a long-term interruption.
• Notification expenses – Most states have notification requirements dictating how and when a business must notify parties whose private information was possibly compromised or obtained by someone without authorization. In some cases, a business must provide ongoing credit monitoring or identity-theft insurance. This covers that.
• Content liability – Like homeowners insurance, which protects your personal property, content liability helps pay for anything related to your online content and provides protection from copyright claims, slander, invasion of privacy and other IT claims.
• PR and crisis management – If your company experiences a security breach, the company image is tarnished. This coverage would help pay for subsequent public relations and marketing efforts required to restore the damage done to your company’s brand.
• Data loss and system damage – If you’ve always assumed your current commercial liability policy includes computers under personal property coverage, you may be surprised to find it that it only covers the computer itself – not what’s inside. Computer data isn’t protected under other insurance products, so this coverage is vital to the functioning of the company and its systems.