Risk & Business Magazine Knight Archer Insurance Magazine Fall 2017 | Page 29
CYBER LIABILITY INSURANCE
A
s technology becomes
increasingly important for
successful business operations,
the value of a strong Cyber
Liability Insurance policy will
only continue to grow. The continued rise
in the amount of information stored and
transferred electronically has resulted
in a remarkable increase in the potential
exposures facing businesses. In an age
where a stolen laptop or hacked account
can instantly compromise the personal
data of thousands of customers, or an ill-
advised post on a social media site can be
read by hundreds in a matter of minutes,
protecting yourself from cyber liability
is just as important as some of the more
traditional exposures businesses account
for in their general commercial liability
policies.
WHY CYBER
LIABILITY
INSURANCE?
A traditional business liability
policy is extremely unlikely
to protect against most cyber
exposures. Standard commercial
policies are written to insure
against injury or physical loss and
will do little, if anything, to shield
you from electronic damages and
the associated costs they may
incur. Exposures are vast, ranging
from the content you put on your
website to stored customer data.
Awareness of the potential cyber
liabilities your company faces is
essential to managing risk through
proper coverage.
Your own “data” is not covered
under a standard property policy
because “data” is typically excluded.
Even if it is not excluded in the
policy, it may not be covered to
begin with as part of the definition
of “property” because “data” is not
considered tangible property.
POSSIBLE EXPOSURES COVERED BY A
TYPICAL CYBER LIABILITY POLICY MAY
INCLUDE:
• Data breaches – Companies
are beginning to have a greater
responsibility to protect clients’
personal information. In the event of
a breach, notification of the affected
parties is now required by law in
Alberta, and may soon be required
throughout Canada. This will add to
costs that will also include security
fixes, identity theft protection for
the affected parties and protection
from possible legal action. While
companies operating online are at a
heightened risk, even companies that
don’t transmit personal data over the
Internet, but still store it in electronic
form, could be susceptible to breaches
through data lost to unauthorized
employee access or hardware theft.
• Intellectual property rights – Your
company’s online presence, whether
it be through a corporate website,
blogs or social media, opens you up
to some of the same exposures faced
by publishers. This can include libel,
copyright or trademark infringement
and defamation, among other things.
• Damages to a third-party system – If an
email sent from your server has a virus
that crashes the system of a customer,
or the software your company
distributes fails, resulting in a loss for a
third party, you could be held liable for
the damages.
• System failure – A natural disaster,
malicious activity or fire could all cause
physical damages that could result in
data or code loss. While the physical
damages to your system hardware
would be covered under your existing
business liability policy, data or code
loss due to the incident would generally
not be covered.
• Cyber extortion – Hackers can
hijack websites, networks and stored
data, denying access to you or your
customers. They often demand money
to restore your systems to working
order. This can cause a temporary
loss of revenue and generate costs
associated with paying the hacker’s
demands, or rebuilding if damage is
done.
• Business interruption – If your primary
business operations require the use
of computer systems, a disaster that
cripples your ability to transmit data
could cause you, or a third party that
depends on your services, to lose
potential revenue. From a server failure
to a data breach, such an incident can
affect your everyday operations. Time
and resources that normally would
have gone elsewhere will need to be
directed towards the problem, which
could result in further losses. This
is especially important, as denial of
service attacks by hackers have been
on the rise. Such attacks block access
to certain websites by either rerouting
traffic to a different site or overloading
an organization’s server.
Cyber Liability Insurance is specifically
designed to address the risks that come
with using modern technology--risks
that other types of business liability
coverage simply won’t cover. The level of
coverage your business needs is based on
your individual operations and can vary
depending on your range of exposure. It is
important to work with a broker who can
identify your areas of risk so a policy can
be tailored to fit your situation. +
KNIGHT ARCHER INSURANCE, YOUR COVERAGE EXPERT
As reliance on technology continues to increase, new exposures continue to emerge. As
your business grows, make sure your cyber liability coverage grows with it. Knight Archer
Insurance Ltd. is here to help you analyze your needs and make the right coverage decisions
to protect your operations from unnecessary risk.
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