Vail Daily column: Should I get cyber-liability insurance? | VailDaily.com

Vail Daily column: Should I get cyber-liability insurance?

Noel Harris
Wall Street Insurance

Question: Can I insure my business from the potentially harmful results of a data breach that would expose our client’s data and possibly affect their financial health?

Answer: Cyber-attacks are becoming more frequent and severe. The largest data breach in history just occurred when a Russian crime organization was able to breach thousands of websites, user names and passwords. During the breach, they didn’t just target large companies; they went after every website their victims visited, thus making any size company vulnerable.

The typical business insurance policy only covers so-called “tangible” assets and electronic data is not considered tangible under the typical policy definition.

Cyber-liability insurance fills that gap and should be part of the comprehensive business insurance package. Cyber liability coverage is a relatively new insurance coverage for liability that arises out of unauthorized use of or unauthorized access to electronic data or software within your network or business. Cyber liability policies also provide coverage for liability claims for spreading a virus or malicious code, computer theft, extortion or any unintentional act, mistake, error or omission made by your employees while performing their job.

There are some risks that are commonly covered by cyber-liability policies; however, cyber-liability policies and endorsements tend to be customized to meet the risk-management needs of the policyholder. Because businesses are unique in many ways, this customization feature allows the insurer to tailor a policy to meet the unique nature of each business. Thus, the type of business operation will dictate the type and cost of cyber-liability coverage. The size and scope of the business will play a role in coverage needs and pricing, as will the number of customers, the presence on the Web, the type of data collected and stored, and other factors.

Cyber-liability policies might include one or more of the following types of coverage:

• Liability for security or privacy breaches. This includes loss of confidential information by allowing, or failing to prevent, unauthorized access to computer systems.

• The costs associated with a privacy breach, such as notification, customer support and costs of providing credit monitoring services to affected consumers.

• The costs associated with restoring, updating or replacing business assets stored electronically.

• Business interruption and extra expense related to a security or privacy breach.

• Liability associated with libel, slander, copyright infringement, product disparagement or reputation damage to others when allegations involve a business website, social media or print media.

• Expenses related to cyber extortion or cyber terrorism.

• Coverage for expenses related to regulatory compliance for billing errors, physician self-referral proceedings and Emergency Medical Treatment and Active Labor Act proceedings.

Cyber liability insurance should be part of the overall risk management strategy, complementing a comprehensive data breach protection protocol.

Noel Harris is the owner of Wall Street Insurance in Edwards. He and his team of highly specialized agents have served the insurance needs of the community for the past 30 years. Contact them at 970-926-4900 or visit http://www.wall streetinsurance.com.