Cyber liability insurance won’t prevent a hack, but it will help you recover from one. There are two main types:

Here’s a breakdown of the coverage in cyber liability policies.

Client notificationStates have data breach notification laws that require companies to tell clients about breaches.
Free credit monitoringServices can cost $10 to $30 per month per individual. Most states require businesses to provide it for a year.
State and federal penaltiesYou might be fined if you are found liable for a breach.
Legal defense costsYou’ll need to mount a defense if a client sues you for exposing their data.
Cost to repair damagesYou’ll need tech expertise to rebuild your computer systems and networks.
Loss of transferred fundsYou’ll want reimbursement for any money lost to a transfer-of-funds scheme.
Ransom negotiationsAn expert can help by removing emotions from the process and negotiating a payment reduction.
Ransom paymentsSome policies reimburse ransom payments, but the conversation around ransom payments is changing. Make sure you understand the exclusions.
Business interruptionA cyberattack can halt your business operations. You’ll need time for digital restoration, and business income replacement provides a lifeline.
Digital forensicsA digital forensics investigator can identify how the data breach occurred. They can help establish liability, and their findings often provide a blueprint for preventing future hacks.
Public relationsA public relations specialist can help rebuild your business reputation after a nasty hack.
Data breach due to stolen propertyCyber liability won’t cover the cost to replace a laptop or another device. That’s the job of property insurance. But it will respond to the data exposed due to the theft.
Technology errors and omissions (tech E&O)A company can sue its consultants, freelancers or service providers for causing a data vulnerability. If you access companies’ networks as part of your job, tech E&O can protect you against cyber liability.

You can’t outsource your liability

Even if you use cloud-based software hosted by another company, it doesn’t relieve your liability. You could be named in a lawsuit or required to provide free credit monitoring services to your customers. Depending on the severity of the breach, a vendor’s insurance limits might not be enough to cover their clients.

Takeaways

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