Covid-19 has been levied as a curse upon us and no part of the world has escaped its raft. Many businesses have gone bankrupt and even countries with strong economies are suffering due to it. Setting up a business takes a lot of hard work and dedication is required towards it. Especially steering your business through these tough and challenging times. The world is a cruel place is what we have heard all our lives and with coronavirus in the context, sadly cybercriminals have emerged and made an opportunity for themselves out of all of this. These criminals that with the use of technology have found loopholes and ways to exploit the weak furthermore in this pandemic. According to data published, cybercriminals have tripled their phishing attacks since the beginning of the year 2020.
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Fast Facts About Cyber insurance
There are two kinds of cyber liability insurance: first party and third party.
First-party cyber liability insurance
First-party cyber liability insurance covers data breaches at your own business. For example, a hacker could steal clients’ credit card numbers from an IT consultant’s database. First-party cyber liability can cover expenses related to:
- Notifying clients or customers about the breach
- Credit monitoring services for affected clients
- Cyber extortion demands
- Third-party cyber liability insurance
When a client suffers a data breach or cyberattack, you could face a lawsuit if they believe you were negligent in preventing it. For example, your network security company could set up cybersecurity for a client who suffers a breach and sues your business.
Third-party cyber liability insurance
protects your business from expenses related to the client’s lawsuit, such as:
- Attorney’s fees
- Court costs
- Settlements or judgments
For technology, web, and IT businesses, third-party cyber liability insurance is usually bundled with errors and omissions insurance. Both policies protect against accusations of negligence. The package is called technology errors and omissions insurance, or tech E&O.
Litigation – covers costs to defend lawsuits, including class actions, involving allegations of a failure to prevent the unauthorized use / access of confidential information or of a failure of system security to prevent or mitigate a computer attack, the spread of a virus, or a denial of service, and the payment of judgments, settlements and damages arising out of such a cyber-incident.
Governmental and regulatory – covers costs to respond to or defend against governmental investigations or proceedings, as well as the payment of fines and penalties, relating to a cyber-incident.
Credit and fraud monitoring – covers costs for customer credit monitoring, identity theft protection services, and fraud monitoring following a cyber-incident.
Multimedia – covers costs related to claims of online defamation, copyright and trademark infringement.
Similar to other types of insurance policies, cyber insurance policies often exclude certain losses from coverage. Typical exclusions include claims arising from war, breach of contract, theft of trade secrets, unfair trade practices, and employment practices. Cyber insurance policies also typically exclude coverage for willful, intentional, deliberate, malicious, fraudulent, dishonest, or criminal acts or omissions of the insured.
What should business entities do when a cyber-incident happens that might be covered by cyber insurance?
Business entities with cyber insurance should immediately notify their insurer and broker when a cyber-event occurs. Special care should be taken to ensure that the notification is within the time frame specified in the cyber insurance policy. Many insurance companies have a pre-approved panel of attorneys, consultants and vendors that insured businesses can consult and begin using following a breach.