It is becoming increasing clear that most companies need some type of cyber liability coverage. But what type should you get? What liabilities do you need to be covered for? Here is a brief overview of the types of coverage a cyber insurance policy may include:

1. Breach Notice Costs. Coverage now exists for direct costs incurred by an insured to provide notice to individuals in the event of a security breach, as well as expenses to set up a call center and provide credit monitoring services. These costs involve a multiplier effect. For example, credit monitoring can cost anywhere from $10 to $200 per year, per person impacted by a breach. If one million individuals are at issue, costs could run in the millions of dollars. These costs also include attorney fees and forensic investigation expenses to determine the cause of a breach and whether notice is required under law.

2. Damages and Defense Costs. Provides coverage for information security and privacy breaches and technology professional liability. This element of the insurance plan is specifically designed to provide coverage for damages and defense costs arising out of lawsuits or claims resulting from a data security breach or an act, error or omission in the rendering of professional technology services (like data storage services). Some cyber policies will also protect your business against the cost of regulatory investigations or actions due to a security or privacy breach.

3. Service Provider Breach. With more companies outsourcing their data processing to third parties or the “cloud,” it is important that a cyber policy provides coverage if the security breach happens to one of the insured’s service providers. That will protect your company against many types of expenses. However, these policies are unlikely to provide any coverage for the personnel hours expended internally to address the breach.

4. Crisis Management, Business Interruption and Data Restoration. This insurance can also help cover the costs for getting the network back up and running and restoring lost data. Public relations services may also be included to help restore the company’s reputation.

5. Denial-of-Service Attack. If your company or a service provider, such as a web host, is shut down by a denial-of-service attack or other type of hack, some insurance policies will cover lost income and the costs of repairing the network.

6. Cyber Extortion. In a case where a hacker decides to hijack your website, network or database, and demands money to restore it, a cyber extortion clause in an insurance policy can help to cover the settlement and the cost of hiring a security firm to track down the hacker.

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