Cyber Insurance: 3rd party liability coverage is key
So, we talked in the last blog about cyber insurance coverage for first-party losses. All well and good, but that crime will likely have impact on outsiders, such as your customers.
Third-party losses refer to your liability for the consequences of the data breach to others.For simplicity’s sake, this most often will be those customers whose data was “hacked.” Without question, the biggest issue here is the damage to someone’s data. It may be released to the public, used for criminal purposes such as identity theft, financial fraud, or even to create public scandal. ( remember the dating website for married people looking to have affairs?) There is no end to the mischief and the damage cyber criminals can cause. We can identify at least three main areas where you would want coverage.
- Network Security – Lawsuits may occur alleging that you failed in some way to provide adequate security for the data. If the data was compromised, or the data could not be accessed as required because of the event, the claim would be you were in some way negligent regarding network security and failed to protect PII.
- Network Privacy – This refers to lawsuits alleging damage from the exposure of PII. Examples would be identity theft, damage to credit ratings, invasion of privacy, etc.
- Errors and Omissions – Suits could also claim that mistakes in your software design or a coding error was what led to the vulnerability.