Cyber liability insurance won’t prevent a hack, but it will help you recover from one. There are two main types:

• First-party coverage, which responds to a loss resulting from a cyberattack on your business network
• Third-party coverage, which responds to cyberattacks on others’ systems or networks

Here’s a breakdown of coverage in a cyber liability policy.

Client notification	States have data breach notification laws that require companies to tell clients about a breach.
Free credit monitoring	Services can cost $10 to $30 per month per individual. Most states require businesses to provide it for a year.
State and federal penalties	You might be fined if you are found liable for a breach.
Legal defense costs	You’ll need to mount a defense if a client sues you for exposing their data.
Cost to repair damages	You’ll need tech expertise to rebuild your computer systems and networks.
Loss of transferred funds	You’ll want reimbursement for any money lost to a transfer of funds scheme.
Ransom negotiations	An expert can help by removing emotions from the process and negotiating a payment reduction.
Ransom payments	Some policies reimburse ransom payments, but the conversation around ransom payments is changing. Make sure you understand the exclusions.
Business interruption	A cyberattack can put a halt to your business operations. You’ll need time for digital restoration, and business income replacement provides a lifeline.
Digital forensics	A digital forensics investigator identifies how a data breach occurred. They help establish liability, and findings often provide a blueprint for preventing future hacks.
Public relations	A public relations specialist can help rebuild your business reputation after a nasty hack.
Data breach due to stolen property	Cyber liability won’t cover the cost to replace a laptop or other device (that’s property insurance), but it will respond to the data exposed due to the theft.
Technology errors and omissions (Tech E&O)	A company can sue its consultants, freelancers or service providers for causing a data vulnerability. If you access companies’ networks as part of your job, Tech E&O can protect you against cyber liability.

You can’t outsource your liability

Even if you use cloud-based software hosted by another company, it doesn’t relieve your liability. You could be named in a lawsuit or required to provide free credit monitoring services to your customers. Depending on the severity of the breach, a vendor’s insurance limits might not be enough to cover their clients.

Takeaways

• Implement cybersecurity measures (train employees, use multifactor authentication, update your software and require strong passwords).
• Evaluate your vendors’ and partners’ cyber liability insurance and protection protocols.
• Create a cybersecurity and data breach response plan, including insurance.