Cyber Privacy Liability

Theft of private information is on the rise. No longer is this just a risk to large corporations, but hackers are now hitting companies of all sizes in all industries.

Claims can often result from any of the following:

• Identity theft resulting from lost or stolen Social Security numbers or credit card, driver’s license, or financial information
• Hacker theft of confidential information or costly e-vandalism
• A lawsuit stemming from a security failure or alleged technology error or omission that results in damages to customers
• An e-business interruption resulting from a security failure or Internet virus
• A cyber extortion threat
• Costs related to privacy notification, crisis management, and disaster recovery

What every business needs to know about data breaches:

• The culprit is often someone close to your business. A surprisingly large proportion of data breaches are carried out by insiders – over half by some estimates – or by business partners. A trusted employee could be the culprit.
• The perpetrator could live halfway around the globe. To vandalize your building, a criminal must be on site. But a hacker can operate from anywhere in the world. Organized cyber crime rings operate worldwide 24/7.
• Size doesn’t matter. Half of all companies that suffer data breaches have fewer than 1,000 employees.
• Any company can be hit. Cyber criminals don’t care where they steal private information from: retailers, health care institutions, manufacturers, professional service providers, media and entertainment companies, and financial institutions are all likely to be targeted.
• A breach can result from a simple mistake. An employee might misplace a laptop, Blackberry, or computer tapes or leave these in an unsecured location, such as an unlocked car.
• Cyber risk is steadily increasing. Data breaches affect hundreds of millions of records a year and reports of breaches continue to rise at a dramatic rate.

Coverage that should not be considered optional anymore:

Some businesses operate under the belief that their existing insurance policies are enough to cover their data security exposures. Unfortunately, this may not be the case. A Cyber Privacy Policy is a flexible insurance solution designed to address risks associated with doing business in today’s technology-dependent world. Coverages available include:

• Third-party cyber liability coverage for:
• Disclosure injury, including lawsuits alleging unauthorized access to or dissemination of the plaintiff’s private information. (Can be extended to outsourced data processing and data storage services.)
• Content injury, including suits arising from intellectual property infringement, trademark infringement, and copyright infringement.
• Reputational injury, including suits alleging disparagement of products or services, libel, slander, defamation, and invasion of privacy.
• Conduit injury, including suits arising from system security failures that result in harm to third-party systems.
• Impaired-access injury, including suits arising from system security failure resulting in your customer’s systems being unavailable to its customers.
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  • First-party cyber crime expense for:
  • Privacy notification expenses, including the cost of credit-monitoring services for affected customers, even when state law doesn’t require notification.
  • Crisis management and reward expenses, including the cost of public relations consultants.
  • E-business interruption, including first-dollar extra expense.
  • E-theft and e-communication loss, extended to networks outside of your company’s system.
  • E-theft, including the cost of a professional negotiator and ransom payment.
  • E-vandalism expenses, even when the vandalism is caused by an employee.

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Information courtesy of Chubb Insurance Company