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Cyber Liability Insurance Claims

Cyber Liability Insurance Claims Examples - ALLCHOICE Insurance - North Carolina

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Your company faces risks of cybercrimes, no matter how small. There are many cyber crimes that your company may fall victim to, which don’t always involve losing a computer. You need financial protection to ensure your customers’ and your safety when cybercriminals attempt to infiltrate your systems.

You need to understand how cyber insurance can assist your business. So, we collected some common examples of cyber liability claims that cyber insurance can cover.

What Are Cyber Liability Insurance Claims?

Rogue employees are other cases of stolen identities. Former employees may take the company data they formerly had access to and then sell them to websites that create false identities. Expenses for damage and defense in such liability cases may reach a half-million to a million dollars.

Customers can do the same to your company if a cybercriminal steals their trade secrets. Both cases can be expensive, which includes legal fees and customer rewards reaching up to half a million dollars.

If you run a health facility, these leaked documents are a violation of the Health Insurance Portability and Accountability Act (HIPAA). The government issues HIPAA breach penalties that reach up to $50,000 per violation.

You risk losing income while your system undergoes repairs and maintenance. Many cyber insurance policies include coverage for lost income while your business remains non-operational.

Data breaches are avoidable, and your consumers may sue you for bad data breach response measures. The IBM (International Business Machines) reported an average cost of $3.86 million in data breaches in 2020.

The office of North Carolina Attorney General Josh Stein listed the following inclusions that you must notify consumers about, should you experience a security breach:



Cyber Insurance Coverage Types

Insurance companies offer cyber insurance policies to protect your business from the fines that you risk facing. Insurers offer two types of cyber liability insurance: first-party cyber insurance and third-party cyber insurance.

First-Party Liability Coverages

This type of cyber liability insurance covers the expenses for the risks that directly affect your business.

CoveragePays For
Bodily Injury and Property Damage LiabilityBodily or property damage that occurs due to a cyber-attack. Sometimes criminals take company data by brute force which may leave some people hurt in the process.
PollutionDamages to systems that may compromise the environment. This policy is important for businesses in the environmental sector whose operations involve water pipes or hazardous materials.
Computer ReplacementYour hardware that suffers severe impact from malware. You will need a new device when a cyber-attack leaves your computer irreparable, or when a thief steals your company computer.
Fund Transfer FraudYour financial losses in the event of a security or social engineering failure. Cybercriminals can intercept money transfers that your unsecured network may conduct, causing you to lose money to fraudsters.
Service FraudFake charges from companies that bill you for activities that a hacker conducted. Telephone service providers or cloud service providers may charge you for extra expenses when a hacker uses their services with your name.
Digital Asset RestorationExpenses for replacing, restoring, and recreating the data you lose in the event of a breach. You will need to retrieve your digital assets that get damaged when your security measures fail.
Business InterruptionLost income while your company undergoes security maintenance. When your company’s security measures fail, you risk financial losses when you undergo data restoration. This process interrupts your business operations, which require extra expenses to bring your system back online.
Cyber ExtortionMoney that digital extortionists demand from your company when they hold your data hostage. When cybercriminals succeed in stealing data, they usually demand money in exchange for not leaking your information.
Data Breach Response (Crisis Management, Public Relations, and Reputation Repair)Expenses to pacify a data breach. Data breach incidents require you to inform everyone involved in your company’s operations of the data breach. Parties involved include your employees, your customers, and government agencies like the Attorney General’s Consumer Protection Division.
First Party Cyber Insurance Claims Examples

Third-Party Liability Coverages

This type of cyber liability insurance protects your company from expenses that you face when your clients hold you liable for failure to protect their data.

CoveragePays For
Bodily Injury and Property Damage LiabilityExpenses needed to heal injuries or repair property damage that results from security failures on your end.
Network and Information Security LiabilityLegal fees you face when you fail to protect your clients’ personally identifiable information. Customers can take legal action when your company falls victim to a cyber-attack, compromising their identity and sensitive financial information.
Regulatory Defense and PenaltiesGovernment charges when you fail to protect consumer data. North Carolina laws will penalize you for your poor cyber defense measures that result in compromised consumer information.
Multimedia Content LiabilityExpenses that result from wrongful acts related to multimedia, including piracy, defamation, and copyright infringement.
PCI Fines and AssessmentsPrivacy violation fees that the Payment Card Industry Data Security Standard (PCI DSS) charges you for.
Technology Errors and OmissionsDamages and defense initiatives for your company when your services result in data loss.
Third-Party Cyber Insurance Claims Examples


Conclusion

Cyber liability insurance claims are the instances that cyber liability insurance can cover. Most of these claims involve data loss, which results in expensive recovery expenses and legal fees. You need the proper financial protection for your business, especially if you manage sensitive consumer data.

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