What Is Cyber Liability Insurance?Cyber liability insurance, also known as cyber security insurance, is a type of insurance that shields your organization from the risks associated with using technology to conduct business, especially data breaches and hacking attacks. Since cybercriminals refine their tactics constantly, cyber liability insurance is more important than ever. For many businesses, being attacked is just a matter of time, and the costs associated with data breaches continue to climb. For example, a study conducted by IBM found that the average total cost of a data breach in 2021 was $4.24 million, 10% more than the previous year, and the highest cost since the report began. No business can face this type of risk by itself.
Who Needs Cyber Liability Insurance?If you think that only sophisticated companies need cyber liability insurance, think again. The truth is that any business that uses technology in some capacity needs cyber liability insurance. Even if you consider your business to be small, you need cyber liability insurance if you handle any of the following:
- Credit card information
- Customer information such as emails, telephone numbers, and physical addresses
- Social Security numbers
- Drivers’ license numbers
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Cyber Liability: Claim ExamplesNo doubt, all of the above is interesting. But what does cyber liability insurance look like in real life? Here are some examples of cyber liability insurance claims to help you understand the importance of this type of insurance:
- Notification expenses. Your company suffers a data breach and you are required by law to notify individually all customers whose data has been compromised
- Investigation. Hackers attack your company’s website and the Payment Card Industry Agreement mandates that you hire a specialized investigator to determine the extent and causes of the attack.
- Fines. You own a medical company and your patients’ data is compromised. As a consequence, you are fined for HIPAA violations after an investigation is carried out.