What Does Cyber Liability Insurance Cover?

When you hear the term ‘cyber-attack’, it mostly reminds of an organisation being targeted for its highly confidential data. However, that is not the only case. A cyber-attack can even occur on individuals. A computer virus from an unsuspecting application, ads that are directed to scam unsuspecting individuals, to deeply hurtful cyberbullying are all examples of cyber threats that even individuals face. Hence, staying alert in an age of digital footprint is critical.

A cyber insurance plan is a safety net that helps cover financial losses arising from data breaches and other cyber events that have a negative impact. Often misconstrued to be offered only to corporate entities, it can also be purchased by individuals.

Cyber insurance plans include a range of events that are covered within the policy — some as a part of the standard coverage, whereas some as optional. Depending upon the insurance plan, the cyber insurance coverage is classified in two types –

• Coverage for cost of breach*
• Coverage for claims and lawsuits *

Coverage for cost of breach

Cost of data breach is the primary requirement of the policyholder and covers first-party damages. This includes reimbursement for the business cost that is already incurred.

• Data restoration

The cost required to replace or restore the electronic data, software damaged or destroyed are covered within data restoration coverage. *

• Loss of income and additional costs

This coverage of a cyber insurance policy provides for any losses incurred due to a cyber-attack and the additional costs required to restore the normal operations. Some cyber insurance plans even include the income lost by an organisation due to such an event. *

• Cyber extortion

Cyber insurance coverage includes any money that is paid to the hacker to prevent the data breach. However, there are certain terms that need to be satisfied and only then compensation for cyber extortion shall be paid for. *

• Cost of crisis management

A cyber insurance plan also covers the cost of managing the cyber-attack like hiring professionals required for keeping the losses to a minimum level. This includes engaging the services of forensic accountants, lawyers, public relation experts, computer experts, and more. *

Coverage for claims and lawsuits

Apart from first-party coverage, cyber insurance plans also offer coverage for third-party liabilities. Third parties are those individuals that allowed the cyber-attack to occur due to negligence. This also covers events where the insured entity is protected due to a mistake on their part resulting in a loss to their client. *

Third-party coverage includes the legal expenses for being blamed for a loss and covers the following –

• Legally obligated settlements, civil awards and judgements that require you, the policyholder, to compensate to a third person. *
• Electronic media liability that includes copyright infringement, domain name, trade name, etc. *
• Coverage for employees’ privacy as well as network security and privacy. *

While cyber liability plans cover the losses arising due to cyber-attacks, negligence on part of the policyholder are not valid grounds to make any claims. Thus, as a policyholder, you need to ensure all the right steps are made to safeguard against cyber-attacks on your part. Remember these pointers about cyber insurance coverage at time of purchase and insurance renewal and accordingly select a suitable plan. *

* Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.