Perhaps the line of commercial business insurance that is getting the most buzz nowadays is cyber liability coverage. Cyber security risks have become much more significant as private and confidential consumer financial (and health) information is increasingly stored in electronic form and readily accessible on line.
We, as a nation, have become more reliant on electronic communication, and because businesses collect and maintain so much of this information regarding their customers and employees, the opportunity for hackers and thieves to infiltrate these databases is now a huge concern.
Managing the risks associated with cyber breaches
Managing cyber risks through insurance is currently the best available option. The market for cyber liability insurance is now on the fast track, and it’s expected to continue to grow dramatically over time as businesses gradually come to realize that most of their current business policies do not adequately cover the cyber risks that they may face. With each announcement of a major retailer or corporation experiencing a significant business loss, the awareness steadily grows.
The frequency and severity of these data breaches only add additional pressure for a lot of companies to step up their efforts to protect the personal information that they have in their possession. These cyber attacks come from a lot of different sources, including other nations, states, terrorists, criminals, activists, external opportunists and company insiders (both intentional and unintentional).
The purpose of a cyber criminal varies, from simple personal gain, to attacking to gain some type of political, military or economic advantage. They usually target money or information that can eventually be monetized, such as credit card numbers, health records, personal identification information and tax returns.
Most business owners are familiar with commercial business insurance policies that provide general liability coverage to protect their companies from injury or property damage. However, most standard commercial lines policies do not cover many of the cyber risks mentioned in this article. To cover these unique cyber risks through insurance requires the purchase of a special cyber liability policy.
Policies for cyber risk are customized and therefore more costly depending on the type of business operation. The size and scope of the business will often play a role in determining coverage needs and pricing, as will the type of data collected and stored, along with certain other factors.