Cyber Risk Insurance Frequently Asked Questions

Privacy laws are constantly evolving, creating new responsibilities for businesses. If you experience a privacy or security breach, will you know what to do? Insurance is available for this risk. Called by different names, such as Privacy, Network Security, Data Breach or Cyber Risk Insurance, this protection is critical for all organizations.

What is it?

Protection from cyber and technology risks, such as:

  • loss or inadvertent disclosure of confidential private information, like clients’ or employees’ social security numbers, bank account numbers or credit card numbers
  • computer viruses or hacking resulting in damage/disruption to computer systems, or theft of private information

What does it cover?
  • Claims made by clients or employees
  • Regulatory proceedings, fines and penalties relating to privacy laws
  • Direct expenses to address a breach, such as notifying affected individuals, identifying the cause of the breach, and public relations for adverse publicity
  • Some policies also cover loss of money due to hacking

Who needs it?

Anyone who collects or stores private information! Most businesses require confidential information from clients in order to provide services. The use of technology has made us more efficient, but it has also increased the challenge of protecting private information from accidental or malicious actions.

Why should I buy it?

Regardless of the amount of time dedicated to security, or the sophistication of controls, data breaches continue to occur at an alarming rate. Additionally, hackers are increasingly targeting small businesses that may not have sophisticated security measures in place. The average cost of a data breach is $154 per customer record compromised. Cyber liability policies cover direct costs to address a breach, plus legal expenses and settlements from lawsuits.

How much will it cost?

Rates vary from one insurer to the next, and are often based on annual revenue or the number of records held /stored. Premiums are customized for each organization, and typically start between $700 – $1,500 depending on the type and size of the firm, the policy limit, coverage provided, and insurer.

Isn't this covered by one of my other policies?

Probably not. Most policies provide no coverage at all. Even if coverage is provided, it is extremely limited. A standalone policy dedicated to this risk ensures there is coverage not only for legal expenses and liability, but also direct costs to address a breach.