Does Cyber Insurance Cover Me if I Am Sued?

Following a data leak, you may find yourself saddled with a lawsuit on top of everything else. But will your cyber insurance cover you in this situation?

Yes – you are covered for any third party liability damages as well as your defence costs.

When your company suffers a data breach, a lot of personal and sensitive information can be leaked. This means your customers, employees and anyone else’s data that you store is at risk. Hackers can use this information to intimidate, impersonate or steal from these people, so you may find yourself dealing with a court case as well as commissioner’s fines.

Your cyber insurance should cover these costs, however. In this article, we’ll cover the following questions:

• Will my cyber insurance cover lawsuits?
• What costs does my cyber insurance cover me for?
• Someone is suing me after a data leak – can I claim for my court costs?

Going to court is a last-ditch attempt for both parties. However, having adequate cyber insurance in place ensures that everything can be resolved to everybody’s satisfaction.

First party liability cover

Cyber liability insurance covers financial losses that result from data breaches and other cyber events. Most cyber policies include both first-party and third-party coverages, but to make sure of this you’ll need to check your policy wording. Some coverages may be included automatically – but you may need to specify if you want others.

First-party cover pay expenses your firm directly incurs as a result of the breach, such as the cost of informing your customers that a cyber attack has taken place. It could also include the costs of hiring security experts to mitigate the damage, and protect your business in the future.

First-party cover does not cover court expenses. However, it will help you with:

• Loss or damage to electronic data
• Loss of income
• Damage to your business’s reputation
• Cyber extortion
• Notification costs

These are the kinds of costs most people are worried about after a cyber attack. However, unless you’re in the know about third party liability, you may be hit with a nasty surprise down the line.

Cyber liability insurance covers financial losses that result from data breaches and other cyber events. Most cyber policies include both first-party and third-party coverages, but to make sure of this you’ll need to check your policy wording. Some coverages may be included automatically – but you may need to specify if you want others.

First-party cover pay expenses your firm directly incurs as a result of the breach, such as the cost of informing your customers that a cyber attack has taken place. It could also include the costs of hiring security experts to mitigate the damage, and protect your business in the future.

First-party cover does not cover court expenses. However, it will help you with:

• Loss or damage to electronic data
• Loss of income
• Damage to your business’s reputation
• Cyber extortion
• Notification costs

These are the kinds of costs most people are worried about after a cyber attack. However, unless you’re in the know about third party liability, you may be hit with a nasty surprise down the line.

Third-party cover

You will have cover for court fees under the third party liability section of your cyber insurance policy.

Third-party coverage, however, applies to claims against your firm by people or companies that have been injured as a result of your actions or failure to act. For instance, when one of your clients sues you for negligence after a hacker steals his personal data from your computer system and releases it online.

Third-party liability will cover you for things like:

• Regulatory fines and administrative costs
• Lawsuits related to libel, slander, defamation or copyright infringement as a result of the data leak
• Claims against you for negligence or failing to adequately protect personal data

A great deal of harm can be done by releasing personal information. Data doesn’t have to include passwords, credit card information or bank details to do irreparable damage to a person. In 2015, over 60gb of user data was leaked from Ashley Madison, a dating website for extramarital affairs. Not only did affected users file a $567 million class-action lawsuit, but several hate crimes and possible suicides were connected with the leak.

Check your policy wording

Whether lawsuits are included in cover or not depends on your own specific policy. Some do not include cover for lawsuits while others restrict the type of lawsuits they cover. They may also restrict the coverage limits they offer.

Cyber crime – and, of course, the cyber insurance that covers it – evolves rapidly. Furthermore, the details of every incident and the fallout that results can differ widely. So while cyber insurance may provide coverage for broad types of liability and lawsuits, the details and the state of the current digital landscape have a big impact on the final payout.

It’s essential for anyone considering cyber cover to study exactly when, where, why, and how coverage applies to lawsuits. If you need more information on anything to do with cyber insurance, feel free to pick up the phone and talk to our experts today!