Cyber Liability Insurance Policies

To protect against damage and costs from cyber data attacks, companies are starting to invest in stand-alone cyber-liability insurance policies.

A cyber liability insurance policy, or CLIC (cyber liability insurance cover), can insure a company against such costs and damages as:

• the cost of notifying affected customers of a cyber data breach to the company’s computer system (such notification is required by statute in most states),
• customer claims against the company, and its officers and directors, for such asserted damages as breach of privacy, identity theft and unauthorized use of credit cards,
• the cost to defend the company against regulatory actions arising from a cyber data breach,
• the cost of investigating the cause of a cyber data breach, and,
• the cost to defend joint liability claims in a cyber data breach of the company’s cloud provider or other out-sourced providers.

Today, companies have as much risk of damage from a cyber data attack as they do from a fire, flood or theft. More risk-management officers are therefore finding that cyber liability insurance coverage is as important a risk management tool as traditional liability insurance coverage.  (Note: General commercial liability policies may or may not be interpreted to cover damage from cyber data breaches, and the scope of coverage may be limited.)

Stand-alone cyber liability insurance policies are an evolving insurance product. There are standardized cyber liability insurance policies available, such as the ISO’s “Internet Liability and Network Protection Policy”, but a standardized policy may be the wrong fit for a company’s specific coverage needs or budget.

Before investing in a cyber liability insurance policy, a company would be well served to:

1. evaluate carefully the nature of its own particular cyber risks and coverage needs,
2. retain an insurance broker knowledgeable in cyber liability insurance, and
3. have an attorney knowledgeable in cyber liability insurance law, review and advise as to the scope of coverage of the company’s proposed policy.

If your company is considering taking out or renewing a cyber liability insurance policy, and would like either of us, David McConnell or Joe Talbot, to review and advise on the legal scope of the policy’s coverage terms, we can do that for a fixed evaluation fee.

You can contact us directly at 1-866-774-2635 or by e-mail at dmcconnell@perkinsthompson.com or jtalbot@perkinsthompson.com.