Inside a Cyber Liability Policy: Real-World Example Explained
Download MP3🔍 Episode Highlights:
- Example used: A real-world cyber liability policy written by Philadelphia Indemnity (not affiliated, used purely for educational purposes).
- Importance of reviewing any insurance policy you hold—business liability, professional liability, errors & omissions, etc.
- Tips on identifying coverage gaps and unnecessary coverage to reduce insurance costs.
- Explanation of digital asset protection:
- Coverage for loss due to damage, corruption, theft, misuse, etc.
- Definition of digital assets: hard drives, data, records, research, and computers.
- Time-sensitive reporting requirements (e.g., within 60 days post-policy expiration).
- Business interruption coverage:
- Covers loss of income, office space rental, and computer replacement costs.
- Cyber extortion/ransomware coverage:
- Reimbursement for extortion expenses if guidelines are followed.
- Requires consultation with insurer and law enforcement.
- Security event coverage:
- Reimbursement for compliance with notification laws.
- Mitigation of harm to brand and media management costs.
- Network security liability:
- Covers damage to others due to your network breach.
- Employee privacy liability:
- Covers breaches of employee personal information.
- Cyber terrorism income loss (with some exclusions).
- Claims expenses:
- Legal defense, attorney fees, and appeal bonds.
- Covered damages include:
- Future profits, client refunds, and offset of fees (with exceptions).
- Media liability definitions:
- Libel, slander, invasion of privacy, and plagiarism—partial coverage.
- Key exclusions:
- Utility failures outside your control (e.g., power surges).
- Governmental actions, natural disasters (unless separately covered).
- Lack of security compliance based on your proposal agreement with the insurer.
- Known vulnerabilities prior to coverage start.
- Previously reported losses to other insurers.
- Acts of terrorism, environmental disasters, ordinary wear and tear.
- Fraudulent, dishonest, or criminal acts by you or employees.
- Unfulfilled contract guarantees or missing bonds.
- Emphasis on following insurer recommendations:
- Reduces risk of uncovered losses.
- Builds trust with insurers, improving renewal prospects.
- Importance of maintaining clean loss runs:
- Keeps your premiums low.
- Makes it easier to get approved for future cyber insurance.
- Historical context: Fire insurance in the 1800s-1900s required inspections—expect similar developments in cyber insurance.
âś… Takeaway:
Even a good cyber liability policy has limitations. Knowing what's covered, what's not, and how to stay compliant with insurer guidelines is your best defense against financial disaster from cyber threats.
Even a good cyber liability policy has limitations. Knowing what's covered, what's not, and how to stay compliant with insurer guidelines is your best defense against financial disaster from cyber threats.
