Few businesses are immune to confidentiality breaches. For this reason, there has been an increased need for Network Security and Data Privacy insurance. While understanding your insurance policy is essential, knowing the right policy to have is just as critical. With various policy offerings available, it is vital to understand the different components, and which are most relevant to your business. Your Insurance Broker should make sure you have the proper breadth of coverage needed.
Here are three standard insurance policy options your organization should know.
Commercial Package Policy Coverage
Many organizations fail to realize that Commercial Package policies may only cover expenses. As a result, some firms lack liability coverage, which allows vulnerability to losses from liability claims. The expense-only coverage added to a commercial package typically only provides coverage for specific expenses. Some of these coverage areas include legal review, public relations, named malware, Personal Confidential Information (PCI), identity theft, and lost wages. However, organizations should strongly consider additional policy options for comprehensive coverage.
Standalone Policies for Cyber Expenses and Liabilities
The Standalone insurance policy enables coverage for both expenses (which is typically only covered in the Commercial Package) and liabilities. The benefit of this type of policy offers protection for an organization against lawsuits filed as a result of security or privacy breaches and containing allegations of failure to protect sensitive information. Most Standalone policies provide media liability insurance, which covers claims alleging libel or slander, invasion of privacy or other wrongdoings. In addition, the Standalone policy covers various property exposures, such as business interruption, data loss/destruction, and funds transfer loss.
The Cyber Liability Component
Computer Fraud and Cyber Crime options live within the Standalone policy. Organizations should work with their Insurance Broker to fully understand all possibilities available with this option. For instance, cyber liability coverage includes protection against computer fraud, cyber extortion, telephone hacking, and phishing scams. Now, claims are being paid out under cyber policies. The most common, prevalent claims are phishing scams and cyber extortion. Also, proper cyber liability prevents cyber deception or social engineering, which is the transfer of funds or property to a hacker impersonating a third party.
With ongoing digital advancements and increasing opportunities for different types of insurance claims, having the right policy is paramount. The standard Commercial Package Policy is no longer enough to protect your business fully. Data privacy and network security controls go hand and hand with having the appropriate Cyber Liability policy. It is not practical to consider one without the other. To best protect your business, it is important to understand coverage options that meet your firm’s cyber security needs.
About the Author:
Marlys Schmitt is an experienced Consulting Partner of ERA Group in Minnesota. As an advisor and advocate, her focus is to build strong relationships and deliver comprehensive cost containment solutions for her CEO and CFO clients. During her tenure with ERA Group, Ms. Schmitt has led reviews of over $20 million in expenses and completed over 100 client projects.