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Cyber Liability Insurance Coverage: Not Your Average Insurance Policy

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Cyber LiabilityToday, the Internet, social media, and online transactions play crucial roles in the way businesses do their business and acquire customers. These, however, likewise serve as potential conduits for cyber attacks. Whether instigated by typical hackers, insiders, criminals, or nation states, cyber attacks are highly likely to happen and could lead to moderate to serious losses for small and huge business alike.

Enter a cyber liability insurance coverage.

What Exactly is Cyber Liability Insurance?

According to, a cyber liability insurance coverage or CLIC is developed for aiding organizations lessen their exposure to cyber risk through offsetting recovery expenses in the event of a cyber security breach or something similar. While there’s no one standard for what a CLIC covers, the following are commonly reimbursed:

  • Business Losses A CLIC could cover items lost through errors because of negligence, as well as financial losses due to network downtime, recovery of lost data, operations interruptions, and other costs related to crisis management, which could involve repairing damage to an organization’s reputation.
  • Investigations – Following a cyber attack, a forensics investigation is usually required to figure out how the attack occurred, how it could be repaired, and how similar security breaches could be prevented. This will usually involve law enforcement, third-party security organizations, and in severe cases, even the Federal Bureau or Investigation.
  • Lawsuits – This includes expenses related to the release of intellectual property, confidential information, regulatory fines, and legal settlements. This could also include cyber extortion costs.
  • Notifications and Privacy – This involves legally required notifications of data breach to customers and relevant parties, as well as credit monitoring for relevant parties whose confidential information might have been breached.

Other Things to Keep in Mind

Take note that cyber insurance coverage is still considered in its infancy and will continue to evolve over time. This is because cyber risks regularly change, and businesses are more inclined to keep silent about the real impact of security breaches to avoid negative press and damage to their reputation.

As a component of a proper risk management plan, however, businesses must routinely select which cyber risks to accept, avoid, transfer or control. And the transfer of accepted risks is where cyber liability insurance will prove to be most beneficial.

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