When a company is at risk for financial loss due to data breach or other cyber events, cyber liability coverage provides protection. Most companies nowadays use computers to receive, store, and send electronic data. Data can include tax records, client information, sales projections, and more. When in the wrong hands, it can be expensive to replace it.
Third-party liabilities cover you when it comes to claims made against you. The coverage may be for defense costs, settlement costs, and more. For instance, say that there is a data breach and you lose sensitive data. Someone could sue you and claim that you acted negligently and did not protect the sensitive data. The policy may also cover libel, defamation, or copyright infringement.
The most common coverages in a cyber liability policy are first-party coverages. These coverages include:
- Loss of data
- Cyber extortion
- Loss of income
- Reputation damage
First-party coverages protect you from business losses that occur due to the cyber-attack or data breach.
When it comes to cyber liability coverage, the main purpose is to have a policy that protects against the costly damages cyber attacks can cause. In some cases, it may be the financial loss to your company and in others, the threat of a lawsuit.