Cyber Security Insurance Policy
We live in an interconnected world. Information technology has revolutionised every aspect of our life making it more convenient. But, the remarkable achievements in the information technology space have also brought along with them attendant threats significantly affecting various facets of the business operations
EY, one of the big four consulting firms, in its 2019 CEO Imperative Study report revealed that CEOs from amongst the world’s largest companies (Forbes Global 2000 Companies & Forbes Largest Private Companies) ranked cybersecurity as the number 1 threat to the global economy in the next 5 to 10 years, even above issues like climate change and income inequality.
Businesses of all sizes face cyber threats, but some industries are more vulnerable than others. A business handling sensitive information is vulnerable to cyber attacks. Similarly organisations dependent upon Information Technology systems for running their operations also are prone to cyber attacks. Attackers can breach sensitive information, set up a phishing expedition, delete some or all data or even hold the data for ransom. Such an attack can lead to a number of situations like business interruption, financial losses occurring due to business interruption, media, privacy and security liabilities etc. To protect a business from such liabilities, it is important to insure operations with a Cyber Insurance Policy.
What is covered under a Cyber Insurance Policy?
First Party Losses:
- Data restoration costs
- Forensic costs
- Business interruption losses
- Costs to investigate, defend, and settle awards imposed by a regulator.
Crisis Management Costs:
- Investigation costs
- Public relations costs
- Customer notification costs
- Credit Monitoring costs
- Extortion rewards and payments
- Defence costs
- Out of court settlements
Major Exclusions under Cyber Security Insurance
- Prior and Pending actions/ claims
- Patent, Trade secrets and copyright infringement
- Bodily Injury and Property Damage
- Intentional/ Dishonest/ Malicious/ Fraudulent conduct
- Terrorism/ War/Nuclear perils
- Trading Losses
- System upgrades
A company insuring itself under a cyber insurance policy needs to regularly revamp its cyber security features.
Since the policy wordings vary from insurer to insurer, it is necessary to understand clearly the coverage and exclusions offered in the context of business operations of a company.
*(The details furnished above are only a summary of the policy features and do not describe all the terms, conditions and exclusions in the policy. Policy finally issued upon binding the cover represents the legal contract between the insured and insurer. If you are interested to know more, please get in touch with our representative)