Insurance against cyber risks
The proliferation of cyberattacks has encouraged insurance companies to write specific cybersecurity insurance policies. Premiums for cybersecurity insurance now total many billions of dollars more than the $1 billion in 2012 and $1.3 billion in 2013. The growth in cyberinsurance premiums has been exponential.
Virtually all of the major insurers offer some type and kind of cybersecurity insurance including coverage for not just the direct losses, but data breach/privacy crisis management expenses related to a cybersecurity incident including investigation, remediation, data subject notification, call management, credit checking for data subjects, legal costs, court appearances and regulatory fines. Among the different types of insurance being offered are
- Business network interruption which covers loss of net profit caused by a material interruption to the insured’s network due to a cyberattack or a network security breach.
- Multimedia/media liability resulting from defacement of a website, infringement of intellectual property rights, or negligence relating to electronic content.
- Extortion liability.
- Network security liability covering the third-party damages resulting from denial of access to a system, costs related to data stored with third-party suppliers and costs related to the theft of data on third-party systems.
- Injury to Reputation.
- Conduit injury resulting from damages to systems affected by breach of the insured’s system.
- Disclosure injury resulting from damages to individuals caused by the unauthorized access of their private information held on the insured’s system.
Failure to obtain cybersecurity insurance against the risk of data breach leaves companies, lawyers, and law firms exposed to serious and perhaps even imminent financial, legal and reputational risk. Obtaining appropriate insurance coverage is an important part of a company’s cybersecurity plan. You should avoid being left alone to deal with the consequences of complex and expensive cybersecurity breaches.