A Cyber Insurance Policy (also known as Cyber Liability Insurance and Cyber Security Insurance) protects organizations from expenses and financial losses due to a cyber attack. General liability insurance policies generally don’t cover these costs, which can quickly add up and become more than most businesses can absorb.

Robust Cyber Insurance policies include a wide range of both first- and third-party coverages.

First-party coverages, compensating the policyholder, include the costs of:

1. IT Forensics Determining exactly how a computer system was breached and what data was accessed, viewed, or exfiltrated (exported) is costly but crucial.

2. Notification Informing customers and clients, vendors, partner companies, and regulators about a cyber attack can be expensive, especially if the process involves running a call center

3. Credit Monitoring and Protection Services Affected companies often provide credit monitoring to individuals whose customer information (birthdates, credit card numbers, and so on) has been affected in data breaches.

4. Crisis Management Organizations’ public response to data breaches and other incidents helps determine how quickly and fully they recover. The price of a good response—including media and PR firm costs—can be high.

5. Crime and Social Engineering Cyber criminals can use stolen credentials to transfer funds from an account or trick people via phishing emails or other social engineering methods into transferring funds to them. In either case, Cyber Insurance can cover the cost.

6. Cyber Extortion Extortionists may destroy, damage, or otherwise incapacitate the network or data of targets who don’t pay their demands. Cyber Insurance can cover ransomware payments, which are often the fastest way to decrypt data, restore systems, and return to business.

7. Cyber Business Interruption General liability insurance usually won’t cover business interruption for companies that heavily rely on the internet or their network for revenue. Cyber Insurance can. It may also cover dependent business interruption (when a mission-critical third-party service goes down) and digital systems failure due to power outages.

8. Digital Asset Damage Cyber Insurance can cover the cost of rebuilding websites, networks, and intranets, and of recovering or restoring electronically held data.

Third-party coverages apply to costs arising from claims made against the policyholder, including:

1. Breach of Personally Identifiable Information (PII) PII includes but is not limited to Social Security numbers, bank account information, credit card numbers, personal health information, and sensitive corporate data.

2. Breach of Contract When a cyber attack stops a company from meeting contractual obligations, a Cyber Liability insurance policy can offer protection from the financial fallout.

3. Transmission of Software Viruses Should an incident result in the affected company unwittingly spreading a computer virus, a strong policy will cover costs from the virus’ discovery to its removal.

4. Denial of Service (DoS) Attacks In DoS attacks, malicious sources overwhelm a network server with traffic, causing it to crash and keeping legitimate users from it.

5. Legal Expenses and Industry Fines Attorneys’ fees, court costs, and fines imposed under the Payment Card Industry Data Security Standard (PCI DSS) can all be covered by Cyber Insurance

Each carrier’s policy comes with cyber risk management tools, which could include:

1. Access to risk management platforms

2. Consultation with IT security teams      

3. Round-the-clock network scanning to discover and mitigate vulnerabilities before a cyber attack occurs

Policyholders also get access to a set of panel vendors including top IT forensic, legal defense, PR, and other firms. Their experience and expertise guide companies through each step of a cyber incident response.

Policies can also include multimedia liability coverage. It applies to claims of libel and defamation, copyright and trademark infringement, and others related to intellectual property.  

Cyber Insurance generally does not cover:

1. Potential future lost profits

2. Loss of value through intellectual property theft

3. Technological improvements and upgrades

4. Losses incurred during the time deductible (“waiting period”)

5. Criminal activity by the insured

The costs associated with responding to and recovering from a cyber attack can easily and quickly reach thousands, tens of thousands, and even millions of dollars. The cost of Cyber Insurance is a modest, wise investment in an organization’s financial health and viability.

4POWER can help you find the best Cyber Insurance policy for your business clients of all sizes. For small startups to middle-market companies, we offer broad liability coverage from multiple leaders in the Cyber Insurance market. You get levels of coverage commensurate with your level of risk and don’t pay for more than you need. For large, companies, we can obtain custom terms through an RFP Process.