Cyber insurance, also known as cyber liability insurance or data breach coverage, is a type of insurance designed to help businesses protect themselves against financial losses resulting from cyberattacks, data breaches, and other cyber-related incidents.
What Does Cyber Insurance Cover?
Coverage can vary depending on the policy, but it typically includes:
Coverage for First-Party Losses (Direct Losses to the Insured)
- Data Breach Response – Covers costs related to investigating and managing a data breach, including forensic services, legal expenses, and public relations.
- Notification Costs – Pays for notifying affected individuals or regulatory authorities.
- Credit Monitoring & Identity Theft Protection – Provides affected customers with identity protection services.
- Data Restoration – Covers expenses to recover or restore lost, corrupted, or stolen data.
- Business Interruption – Covers lost income and extra expenses due to downtime caused by a cyber event.
- Cyber Extortion & Ransomware – Pays for expenses related to ransom demands and extortion negotiations.
- Reputational Damage – Covers PR and marketing efforts to repair brand reputation.
- Fraudulent Funds Transfer – Covers losses due to social engineering, phishing, or other cyber fraud schemes.
Coverage for Third-Party Liabilities (Claims from Others)
- Network Security Liability – Covers claims related to a failure of cybersecurity, such as malware spread or unauthorized access leading to third-party losses.
- Privacy Liability – Covers legal expenses and fines for failing to protect customer or employee data.
- Regulatory Fines & Penalties – Covers fines and penalties imposed by government agencies for data protection violations (e.g., GDPR, CCPA).
- Media & Intellectual Property Liability – Covers lawsuits related to defamation, copyright infringement, or publishing offensive content online.
- Contractual Liability – Covers damages due to failure to meet cybersecurity obligations in contracts with vendors or clients.