Cyber Liability Insurance for Your Online Business


Initiating a business without an online presence is no longer the standard. As many new businesses emerge and older business move onto the web, owners are under the assumption that it will often be more secure and create an easier way to manage process documentation and systems. Although it appears more secure than managing physical information systems and documentation, there is still a greater risk when developing new web assets. Securing your brand and intellectual property with a sound cyber liability insurance policy will ensure that organizations are protecting their virtual assets in the same way they would their physical assets.

Protecting a business from the consequences experienced after a hack, security breach destruction of digital assets or network failures is a significant step in creating professional websites. It is important that internal and external users are supported in the event information is compromised or lost. Within an organization’s web development process, establishing a risk mitigation strategy to protect against complex threats that will harm a brand’s reputation should be discussed with an insurance professional as well as the web developer in terms of how to prevent this on the technical backend.

Facilitating a development environment that aligns with proactive cybersecurity and liability can prevent the loss of customers, partners or even the compromised future of an organization. In the same way small businesses utilize liability coverage to protect physical locations from natural disasters, fires or robbery, cyber liability insurance should be used to protect all digital assets related to the business. Companies are responsible for exchanging information between users and organizational databases whether financial, personal or behavioral. Data breaches and network failure incidents can cost organizations hundreds of thousands of dollars without a policy and risk management strategy. This can also lead to several lawsuits depending on the extent of the damage.

Understanding the potential areas of threat first, will allow for an assessment on the type of coverage and strategy provisions required to prevent and reduce occurrences.

● Media Liability: Establishing media liability coverage is beneficial to organizations who openly share information and intellectual property to third party channels, partners and/or advertisers. As information is accessed and misused, with a proper policy and web development strategy, websites are covered for infringement of IP, copyrighted information and trademarks. Media liability also covers website defacement and defamation of brand or character events.
● Network Failures: As technology advances, hackers advance and so do viruses. These instances are created to hack information on a website or to communicate a message using illegal strategies. Network failure can result in significant data breaches from cyber hackers and cyber terrorists. It also can happen due to overall system failure related to the hosting environment or completely by accident. Having coverage here will allow the business to focus on recovering assets and strengthening the website, rather than shutting down, or spending months in court.
● Data Breaches: Data breaches are covered in the event an internal user (employee or partner) or external user gains access to information that was otherwise private and exposes that information from a known or unknown access point. As the organizations holding user information are responsible for how it is used, the consequences are far greater if not properly covered.
● Loss of Physical Record: Believe it or not, the items on your computer, tablet or mobile device can be covered under a liability insurance policy. If the physical destruction of these items results in a loss of significant business information, cyber liability insurance can cover this as well.
With over half a billion spent on cyber-attacks by companies each year, it’s unfortunate that less than 4 billion is spent on these premiums. When an organization is collecting information via the internet, it is important to consider how liability is handled within a proper risk management strategy. The cost of Cyber Liability insurance varies depending on the type, size and business functions. Knowing it only takes one negative cyber event to destroy a business should be enough motivation to engage a cyber liability expert. If your organization would like to discuss security options within the web development process prior to engaging an insurance expert, Tech Treats can discuss options for developing your backend.

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