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Cyber Liability – Do You Need It?

By December 14, 2011June 8th, 2020Insurance

 

Almost every company uses some form of technology where information is being passed or stored either by network, the Internet, hardware, etc. The more information that you have, the more exposures that exist. More and more companies are experiencing data and security breaches due to the rise of technology and the amount of usage. It is your responsibility as a company to protect that information from being exposed; however, if it does, do you have the proper coverage?

 

Cyber liability addresses the first- and third-party risks associated with online businesses, the Internet, networks, and informational assets. The concept of Cyber Liability is still new in the industry. This coverage protects privacy issues, the infringement of intellectual property, virus transmission, or any other serious trouble that may be passed from first to third parties on the web. According to the Hartford, an insurance company that provides cyber liability coverage, the US will spend about $130 billion fighting these liability litigations that arises just in this year.

 

For example, Washington Post stated that “a large scale cyber attack that occurred at Sony in April of 2011 released personal and billing information of up to 77 million people. That following Monday, another 24.6 million users may have had their personal information stolen as well. Sony suffered 55 class action lawsuits that could cost the company $178 million in damages.”

 

Your commercial general liability policy will not cover for this type of exposure. If you deal a lot on the Internet, it is highly recommended that you obtain a Cyber Liability policy. The Sony breach is on a large scale, but even on a small scale, the damage can be devastating to your business.

 

It is not “if you will experience a security and data breach; it is “when”. It is how you handle that breach and what you do to prepare for it that is crucial to a business.