Cyber liability is a relatively new term in the world of insurance products, but it has become a crucial type of coverage for businesses that rely on any type of electronic data. Any type of cyber or data breach can cause damage to a business, whether it’s just loss of information, or something costlier such as business interruption or claims made against the company by third parties. In this two-part series, we will explore why cyber liability insurance is an important product for agents to offer their clients.
What is Cyber Liability Insurance?
Cyber liability insurance protects a business against data losses caused by cyber-attacks, viruses, and other cyber-related threats. It can also cover third-party lawsuits against a business resulting from data breaches, though there may be a limits reduction provision attached to these costs.
Who Needs Cyber Liability Coverage?
Businesses can benefit from cyber liability coverage if they use any kind of technology as part of their business operations, such as:
- Sending and receiving documents electronically.
- Taking payments through a website.
- Communicating with customers via email or text message.
- Advertising a business online via web page or social media ads.
- Storing employee data on an online network either for record-keeping or as part of an online employee management system.
- Storing customer information such as names, home or email addresses and credit card information on an online network.
- Storing company data such as confidential client communications, projections or trade secrets.
Determining Vulnerability to Cyber Threats
Insurance agents can help their clients determine their level of vulnerability to cyber threats by asking the following questions:
- Who is responsible for the security of the network?
- Does the company’s network have a firewall in place?
- Is the system protected by regularly-updated anti-virus software?
- Are emails, downloads and software installs scanned for viruses before being opened?
- Can employees, clients or customers access your network remotely? If yes, what type of authentication system is used?
- What types of sensitive information are stored in the computer system? Is this data encrypted? Who controls access to this data?
- Are security measures tested periodically?
- Is data regularly backed up and stored? If so, where is it stored?
- Are any network or computer functions outsourced?
- Does the company have a written information security policy? How about a written data breach response plan?
By determining the vulnerability of their clients, agents can better understand their cyber liability needs and help them obtain adequate and comprehensive cyber liability coverage. In part two we will explore the different types of cyber liability coverage.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.