The need for Cyber Liability coverage isn’t limited to Fortune 500 and Global 2000 enterprises. Losses from data breaches and other cyber events impact businesses of all sizes across all industries, so it’s important to educate your clients on the ways Cyber Liability insurance protects them and covers their potential exposure.

Your client may assume that Cyber Liability insurance is only meant to protect their business against malicious or criminal activity, but such events only account for 48% of all data breaches. 27% is caused by human error and 25% originates from IT process failures and system glitches. (source: Ponemon Cost of Data Breach Survey)

Human error is as simple as an employee losing their laptop on a business trip, clicking on a phishing email link, incorrectly disposing of a set of data files or uploading information to the wrong shared file.

While trusting an online provider or software system to store and retain customer records is cheaper than building an internal system, one wrong update or permission setting can expose your client’s customer data with no easy return.  And guess who is responsible when these events happen – even if a third-party vendor is being used – your client.

Commercial businesses are responsible for their online data, no matter where it’s stored (e.g., on their property, in an offsite warehouse, or in the cloud). They will be held liable for any sensitive information that is exposed due to human error or otherwise.

Cyber Liability policies provide the following protections in the event of an unexpected data breach:

Loss or Damage to Electronic Data: Covers the cost to replace or restore damaged electronic data or programs, whether the data belongs to your client’s company or someone else.  Losses must result from a covered event (such as a hacker attack, virus or denial of service attack).

Hiring Expertise: Covers the cost of hiring experts or consultants to preserve or reconstruct lost data.

Loss of Income: Covers income losses suffered and expenses incurred by your client during a business shutdown after a system failure resulting from a covered event.

Cyber Extortion: Applies when a client’s computer network is threatened with damage to data, introduction of a virus, initiation of a denial of service attack, or release of confidential information unless a specific amount is paid. Coverage can include any expenses incurred by making a payment in response to the demand.

Notification Costs: Covers the cost of notifying parties (voluntarily or as required by law) affected by a data breach. May also cover the cost of providing credit monitoring services and establishing a call center.

Damage to Your Reputation: Covers costs incurred for marketing and public relations to protect a company’s reputation following a data breach, sometimes called Crisis Management.

Third-Party Liability Coverage: Coverages afforded by a cyber policy that apply to damages or settlements resulting from covered claims, as well as the cost of defense in any court case.

Cyber insurance is finding its way onto the agendas of businesses everywhere.  Over half of all cyberattacks are aimed at small-to-medium sized businesses.  Also, the fact remains that humans are the weakest link in the cybersecurity chain no matter how hard we try. 

This important coverage isn’t just hyped-up headline news; it’s a real risk for your commercial clients big and small.  MJ Kelly has two in house Cyber Liability specialists that are standing by to properly protect your clients and their businesses.