Cyber Liability insurance protects the business against paying out of pocket for costs related to data breaches and/or other cyber-attacks.
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What Is Cyber Liability Insurance?
Cyber Liability insurance protects against damages caused by electronic threats to computer systems or data. These threats can lead to the theft, damage, or misuse of sensitive information or other vital technologies and can result in downtime and recovery costs that often include specialized repairs and legal fees.
Options are available to cover incident response services, first-party losses (the business), and third-party losses (those experienced by others for which the business may be responsible). Any business that stores or processes sensitive information needs cyber insurance. This data can include names, addresses, Social Security numbers, medical records, or credit card information.
Also, any third party who handles confidential data and information, such as an accountant or IT service, should have their own cyber insurance policy. As more small businesses choose to use and store digital data, the need for this coverage has expanded to more than just the healthcare and banking industries.
What Does Cyber Insurance Cover?
Cyber insurance covers a variety of small business risks that are divided into two parts:
1) First-party coverage – Covers damages that the business may suffer because of a data breach. This can include things like investigative services, business interruption coverage, and data recovery.
2) Third-party coverage – Covers damages if business customers or partners are affected by a cyber attack on the business. This can include legal fees, settlement costs, security failure, and media liabilities. Cyber insurance is important to the financial well-being and future of the small business. A single claim can be costly and difficult to overcome. Cybersecurity insurance helps reduce the potentially devastating effects of a claim. It can cover costs related to IT forensics investigation, data restoration, legal liability, and customer notification.