As cyberattacks become more frequent and costly, it’s crucial for organizations to maximize their financialprotection against related losses by purchasing sufficient insurance. Cyber coverage, also known as cyber liabilityinsurance, can help organizations pay for a range of expenses that may result from cyber incidents—including (butnot limited to) data breaches, ransomware attacks and phishing scams.
Specific cyber insurance offerings differ between carriers. Furthermore, organizations’ coverage needs may varybased on their particular exposures. In any case, cyber insurance agreements typically fall into two categories: first-party coverage and third-party coverage. It’s best for policyholders to have a clear understanding of both categoriesof coverage in order to comprehend the key protections offered by their cyber insurance. This article highlights thevalue of cyber insurance by outlining common first- and third-party coverage offerings.
First-party Coverage
First-party cyber insurance can offer financial protection for losses that an organization directly sustains from acyber incident. Covered losses generally include the following:
Incident response costs—This coverage can help pay the costs associated with responding to a cyberincident. These costs may include utilizing IT forensics to investigate the breach, restoring damaged systems,notifying affected customers and setting up call center services.
Legal costs—Such coverage can help pay for legal counsel to assist with any notification or regulatoryobligations resulting from a cyber incident.
Data recovery costs—This coverage can help recover expenses related to reconstituting data that may havebeen deleted or corrupted during a cyber incident.
Business interruption losses—Such coverage can help reimburse lost profits or additional costs incurred dueto the unavailability of IT systems or critical data amid a cyber incident.
Cyber extortion losses—This coverage can help pay costs associated with hiring extortion responsespecialists to evaluate recovery options and negotiate ransom payment demands (if applicable) during a cyberincident.
Reputational damage—Such coverage can help pay for crisis management and public relations servicesrelated to a cyber incident.
Third-party Coverage
Third-party cyber insurance can provide financial protection for claims made, fines incurred or legal action takenagainst an organization due to a cyber incident. Types of third-party coverage usually include the following:
Data privacy liability—This coverage can help recover the costs of dealing with third parties who had theirinformation compromised during a cyber incident. These costs may include handling third-party lawsuits orlegal disputes, offering credit-watch services and providing additional compensation.
Regulatory defense—Such coverage can help pay fines, penalties and other defense costs related toregulatory action or privacy law violations stemming from a cyber incident.
Media liability—This coverage can help reimburse defense costs and civil damages resulting fromdefamation, libel, slander and negligence allegations associated with the publication of content in electronicor print media. Multimedia liability coverage can also offer protection amid copyright, trademark orintellectual property infringement incidents.
Conclusion
As a whole, it’s evident that cyber insurance can make all the difference in helping organizations avoid large-scalefinancial losses amid cyber incidents. It’s best for organizations to consult trusted insurance professionals to discusstheir particular coverage needs.
Looking for cybersecurity or other HR guidance for your lumberyard? Join NRLA Connect.
NRLA Connect is a free NRLA member benefit powered by Eastern Insurance and Zywave. NRLA Connect is your lumberyard’s online resource for Property & Casualty, OSHA, and Employee Benefits and grants you access to HR professionals via phone or email.
