Cyber Insurance

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Cyber Insurance

Cyber Insurance. What is it and what does it cover?

The internet has changed the world we live in. “Cyberspace” allows people and businesses to communicate, connect and develop in increasingly sophisticated ways.

While the internet has made it faster and easier to communicate, this rapidly expanding technology is not without its risks. Therefore it is essential for both businesses and their customers to be protected by a cyber insurance policy against the cyber liabilities that they face.

Recent legislation changes in Australia now means that it is more important than ever to consider Cyber Insurance.

What is First Party Cover?

First Party Cyber Insurance coverage protects and reimburses a business in the event of a data breach and the fallout from an intrusion.

One of the main areas that First Party Cyber Insurance covers is the period directly after an attack. For many small to medium businesses, the days, weeks or even months after an attack can be difficult to recover from.

First Party Cyber Insurance helps with the business’ revenue in a similar way that a business interruption policy works for a fire damage claim. Further to this, it can also assist with:

  • IT Forensic Costs
  • Public Relation Expenses
  • Retrieval of Data Costs from a Damaged System
  • Cyber Extortion Expenses (including Ransom Payments)
  • Credit Monitoring Costs

What is Third Party Cover?

Third Party Cyber Insurance coverage protects the customers of a business when a data breach occurs. When a data breach does occur, one of the largest problems a business faces is from their own customers.

Customers put their trust in a business to keep their details safe. When this trust is broken, even through no fault of the business, there will be a massive fallout.

Third Party Cyber Insurance focuses on the issues that arise from litigation and legal expenses. This can include costs of defending claims arising from:

  • Unintentional Breach of Privacy
  • Breach of Confidential Information including Employees
  • Intellectual Property Rights infringement
  • Unintentional disclosure of Personal or Financial Information

I Have Existing Insurance. Am I Covered for Cyber Insurance Already?

Unless you have a Cyber Insurance, the answer is usually NO.

Cyber insurance goes beyond traditional liability and property insurances which have not developed, or not kept up, with the speed of change seen in the internet space. Cyber Liability insurance packages address the risks involved with internet exposure to provide you with maximum protection for your business.

Business Insurance

Standard Business Insurance policies traditionally only cover tangible assets, such as buildings, contents, stock and the equipment itself.

Electronic Data is traditionally not considered a tangible asset under the standard definition of a Business Insurance policy. Some policies provide extensions for loss of data however this is usually limited to a breakdown or physical damage of equipment rather than a virus or cyber attack.

General Liability including Public & Products Liability

Whether General Liability cover is within a Business Insurance policy or a stand alone policy, there is traditionally an Electronic Data exclusion.

Unless there is a specific endorsement, most policies will exclude liability claims arising from property damage claims to electronic data, computer programs or storage media.

This can also extend to excluding property damage and injury claims from a business’ online operations.

Professional Indemnity

Professional Indemnity policies may provide some cover for Third Party incidents, including claims for compensation and damages. This is however very limited and restricted to coverage when the business has been negligent in causing the loss.

An IT provider could be sued when their client has suffered from a Cyber related loss. If the IT provider has been negligent in causing the lost, an IT Liability policy could provide some cover.

It is unlikely that a Professional Indemnity (or IT Liability) policy will provide any coverage for a First Party loss.

Management Liability including Directors & Officers Cover

Management Liability policies have been the most progressive of all the covers in that most good Management Liability policies can extend their cover to include some Cyber Insurance cover.

Whilst the Cyber Insurance extension can be taken, it is important to note that for certain business types, a stand alone Cyber Insurance policy is the recommended option to provide the right coverage.

Insurance Cover for an Online Business?

Insurance for websites, online stores, and e-commerce websites is becoming increasingly essential.

Cyber Insurance is not only a requirement for larger online businesses holding large amounts of personal data, but also small-scale website owners who can have the same legal liabilities.

Cyber Insurance can fit the gap between a traditional insurance policy and the modern world.

I Don’t Sell Things on my Website. Do I Still Need Cyber Insurance?

Businesses that are ‘offline’ still face a Cyber exposure.

Whilst an attack may not be to a website, hackers can still target other technology a business relies on.

A business that relies on any hardware or software at their business premises is at risk.

This can include:

  • In-house Server including Email Server
  • Accounting Software such as MYOB loaded on one computer only
  • Point of Sale systems or Quoting Software
  • Any other Software that isn’t backed up externally

Any company operating in today’s high tech world, risks possible exposure from internal and external emails; websites providing information about the company, its products and services; as well as the increased risk of e-commerce.

Legislation is continuing to evolve to further protect consumers and their online information, creating potential new liabilities that were previously unseen.

Cyber Insurance Cover for your Business

Cyber insurance goes beyond traditional liability insurances which have not developed, or not kept up, with the speed of change seen in the internet space.

Cyber Liability insurance packages address the risks involved with internet exposure to provide you with maximum protection for your business.

For further details regarding Cyber Insurance and the ways in which it can provide protection for your business including some claims examples, please refer to our Ultimate Guide For Businesses.

To arrange an obligation-free Cyber Liability insurance quote to protect your business online – and off – complete our online quote form below or speak to one of our experts on 1300 932 237.

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