Find the Right Cyber Insurance Policy

Cyber insurance policies have evolved rapidly over the last several years as the insurance industry seeks to align available coverage with risk and demand while avoiding massive losses.

Insurers offer first and third party insurance. First party coverage insures for losses to the policyholder’s own data, lost income or other harm to the business resulting from a data breach, cyber-attack or ransomware attack. Third party coverage insures for liability to third parties, including customers and governmental entities.

Understanding the nature and extent of your risks is the first step. Companies in some areas are at high risk for exposing personally identifiable information. The major risk to a utility may be the disruption of physical operations through attacks on networks. Companies should purchase coverage that is tailored to their risks.

Your standard first and third party policies may provide some protection from cyber risks, and it is important to understand what coverage may be available under your existing policies. However, insurers are increasingly excluding cyber risks from standard commercial general liability, property, and directors and officers liability policies.

A broker experienced in placing cyber insurance can identify insurers who offer the product most suited to your needs and help negotiate favorable terms and price. Legal counsel can assist the company in evaluating risks and the scope of coverage offered under cyber policies. Working together, a team including your broker and outside counsel can ensure that you purchase the right coverage with appropriate terms and conditions.