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Cyberliability Presents an Emerging and Unavoidable Exposure

March 02, 2015

The business world has changed so dramatically that some of its practices and solutions even from the 1990s now seem as antiquated as Gutenberg’s printing press. Remember when insurance applications were written by hand and binders were faxed?

For today's businesses, complete immersion in the digital culture has potential consequences beyond the understanding of most employees. Access to their employer's computer network, in a way, gives employees the key to the company's kingdom, and one naïve misstep could result in a major loss. Therefore, cyberliability insurance is an emerging but growing line of business that should be at the forefront of every captive owner's mind. 

Although contractual terms and conditions for cyberliability insurance are still being standardized, and the amount of caselaw is minuscule, there are various elements to consider when investigating cyberliability insurance policies.

Currently, there are a number of different vehicles insurers are using to offer some aspect of the coverage, such as add-ons to businessowners policies or property coverages. But within cyberliability there is a delicate interplay between first-party coverage and third-party coverage that needs to be well researched and planned. More insurers are offering stand-alone policies because of the unique and complicated risk elements.

Important components of the emerging cyberliability insurance policies are cyberaudits and cyberrisk management. Helping both the insured and the insurer, a cyberaudit will determine an organization’s cybersecurity soundness and where possible weaknesses of entry exist. Quite often, patching a few holes for a relatively small expense greatly increases an organization's safety. Aside from insurer-mandated cyberaudits, a growing number of companies are offering these and many other services.

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