Small and large companies require protection from data breaches
The rise in cyber liability claims is a frequency issue as well as severity. Remedies for data breach now cost $202 per record.
More than half of companies with less than 1,000 employees have experienced an online data breach, according to Tracey Vispoli, Chubb’s Cybersecurity Product Manager. This shows that the need for cyber liability coverage is not limited to large technology and multi-national corporations.
With increased legal activity, attorneys are inserting the need to carry Cyber Liability into contract requirements.
Clients are also realizing the need for cyber liability especially with expansions of federal regulations such as the Health Insurance Portability and Accountability Act (HIPAA) and Red Flag Rule.
Policy Forms should address how carriers deal with the defense of regulatory matters. For the cost to defend the insured against investigation, some carriers will provide full policy limit. Others will have a sublimit and some forms may only cover costs if there is a civil suit.
There’s a common belief that the majority of data breaches covered by cyber liability insurance occur on public Internet space. The truth is most claims occur on company networks where clients’ personal data is stored. A common misconception among many agents and insurers is that a client does not need cyber liability coverage if their business is not involved in e-commerce.
Paper records should be another concern because an awful lot of confidential information is still stored on paper. Businesses have the same duty to protect that as electronic forms. Many but not all coverage forms extend to paper records.
Source: Big I E Newsletter, September 2009