other cyber perils such as the loss of credit card,
social security and bank account information. The
challenge in understanding cyber coverage is that
there is no standard cyber policy available as each
company designs their own policy wording which
defines what they will insure or exclude.
In today’s marketplace, insurers who specialize
in cyber risks tend to offer more comprehensive
coverage than the standard market carriers
may offer. Some cyber insurers offer a very
comprehensive suite of coverages designed to
respond to the costs of mistakes by employees and
vendors and from malicious attacks and cyber
nuisances. In addition to different covered perils,
agents need to be careful because each insurer may
offer similar coverages yet use different terms to
describe them.
7. MOBILE EXPOSURE: People working with
remote access to corporate computer networks and
using smart phones can increase the risk of a loss.
8. PROMINENT EXPOSURE: Nearly every agency
client purchases insurance for their property and
contents but very few purchase cyber coverage. It
should be noted that the number of data breaches
per year exceed the number of property fire
losses. Theoretically, cyber coverage could be seen
as more important to a company’s well-being than
property coverage.
9. ON-GOING ENTITY: The Ponemon Institute says
80 percent of companies with no cyber insurance
who suffer a major breach declare bankruptcy
within two years.
No Standard Cyber Form
Cyber coverages have evolved since the advent of
the internet and advanced utilization of technology
including storage of electronic data. Hacking
sophistication has increased exponentially and is
more problematic than ever. Insurers first responded
to internet technology perils causing E&O issues
and, after federal and state privacy statutes were
enacted, policies evolved to offer coverage for
Coverages To Look for in Cyber Policies
Reviewing the first and third party coverage
provided by cyber policies is critical. Below is a list
of the types of costs that will be paid for by most
comprehensive policies:
FIRST PARTY LOSS COSTS
• Forensic expenses to determine whether a breach
occurred and what type.
• Crisis management, public relations and
reputational harm costs.
• System damage – to diagnose, restore, repair or
replace equipment and/or data.
• Business Interruption expenses and additional
labor costs arising from a covered loss.
• Extortion and terrorism management and
reimbursement.
• Computer crime, including funds stolen or
manipulated from the insureds’ bank accounts.
• Court attendance costs.
| September - October 2017 | KANSAS INSURANCE AGENT & BROKER
13