Cyber Liability

What You Need To Know About Cyber Liability

For many years now, there has been awareness that companies should be accountable for the safeguarding of the personally identifiable information of their customers.  One particular law that helped to raise awareness was the Health Insurance Portability and Accountability Act (HIPPA) of 1996.  The vast majority of states have amended their state laws to address how companies and state agencies must respond to a security breach that results the compromise or potential compromise of personally identifiable information.  Most state laws dictate that in the event of a breach, not only must the organization notify the affected individuals, but also the specific state agency.

Businesses such as health care providers, banks, law firms, accountants, hotels, retail stores, schools, public entities, charitable organizations, mortgage brokers, insurance agents, and other professional service providers, restaurants and any other business that maintains records of personally identifiable information all have a cyber liability exposure.

Today, the vast majority of businesses rely on their computer systems to run their business and to service their customers.  The inability to operate their computer system due to a cyber attack can cause severe financial damage to the organization.

In order to protect your organization from cyber-attacks, the following cyber risk management techniques can be implemented:

In addition to the listed cyber risk management techniques, the Federal Communications Commission (FCC) provides a tool for businesses that can create and save a custom cybersecurity plan for your organization, choosing from a menu of expert advice to address your specific business needs and concerns.  It can be found at

Even when an organization implements sound risk management techniques and protocols to prevent a cyber-attack, they can still fall victim to cybercriminals.  In order to provide protection for both first-party losses (losses sustained by the organization) and third-party losses (losses sustained by others), an organization can purchase cyber liability insurance.

Not all cyber liability insurance policies are the same. Coverages can and will vary depending on the carrier and the insuring agreements purchased.  When evaluating which cyber liability policy is appropriate for your organization, it is important to evaluate both the first-party insuring agreements and third-party insuring agreements being offered.

Key first-party insuring agreements include the following:

Key third-party insuring agreements include the following:

When evaluating cyber liability alternatives for your business, it is crucial to be sure that the policy you select to protect your business contains the appropriate insuring agreements.  The Risk Management professionals at Hardenbergh Insurance Group can work with you to evaluate your exposure and to ensure that the appropriate coverage is in place to protect your business.

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