Exploring the Forms of Cyber Liability Insurance Coverage

Discover what type of coverage form is cyber liability insurance written, including claims-made and occurrence policies, and key components.

Understanding Cyber Liability Insurance: Coverage Forms Explained

What type of coverage form is cyber liability insurance written in?

  • Claims-Made Policies: Coverage must be claimed within the active policy period.
  • Occurrence Policies: Coverage applies to incidents occurring during the policy period, irrespective of when the claim is made.

The threat of cyber attacks is ever-present. Cyber threats like data breaches, ransomware, and phishing attacks can wreak havoc on businesses of all sizes, leading to significant financial and reputational damage. Many organizations struggle to recover from such incidents without the right protective measures in place.

Cyber liability insurance is a powerful tool in the arsenal of any business aiming to safeguard against these cyber risks. Understanding what type of coverage form is cyber liability insurance written is crucial for any business owner. Knowing the differences between claims-made and occurrence policies can make all the difference in your incident response and recovery.

My name is Griff Harris, CIC, with a strong background in insurance at firms like Marsh & McLennan and Aetna. I’ve dedicated my career to helping businesses understand and secure the right insurance policies, especially nuances like what type of coverage form is cyber liability insurance written.

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What Type of Coverage Form Is Cyber Liability Insurance Written?

Understanding the type of coverage form your cyber liability insurance is written in is crucial for any business owner. Knowing the differences between claims-made and occurrence policies can make all the difference in your incident response and recovery.

Understanding Claims-Made Policies

Claims-made policies are one of the most common forms of cyber liability insurance. With these policies, the coverage is triggered when a claim is made during the policy period, regardless of when the incident actually occurred.

Trigger events in claims-made policies are specific events that must happen for the policy to be activated. For example, if a data breach occurred in 2021 but was discovered and reported in 2022, a claims-made policy active in 2022 would cover the incident.

Reporting requirements are essential to understand with claims-made policies. Typically, these policies require you to notify the insurer of a potential claim as soon as you become aware of it. Delays in reporting can lead to denied claims, making timely notification critical.

Exploring Occurrence Policies

Occurrence policies provide coverage for incidents that happen during the policy period, regardless of when the claim is made. This means that even if a data breach occurred several years ago but is discovered and reported today, an occurrence policy from the time of the breach would cover it.

Coverage scope in occurrence policies is generally broader, as it covers any incident that happens during the policy period. This can provide peace of mind, knowing that past incidents are still covered even if they are discovered later.

Incident timing is a key factor in occurrence policies. Unlike claims-made policies, the exact timing of the incident within the policy period is what matters, not when the claim is made. For businesses that may not immediately detect cyber incidents, occurrence policies can offer more comprehensive protection.

Understanding these differences can help you choose the right type of coverage form for your business, ensuring that you are protected when you need it most.

Key Components of Cyber Liability Insurance

Cyber liability insurance is essential for protecting your business from the financial fallout of cyber threats. Let’s break down the key components of this insurance: Network Security and Privacy Liability, Media Liability Coverage, and Errors and Omissions Coverage.

Network Security and Privacy Liability

Network Security coverage is crucial for businesses that handle sensitive data. This insurance protects you in case of a network security failure, such as a data breach, malware infection, or ransomware attack. It covers first-party costs—expenses you directly incur from a cyber incident. These can include:

  • Costs for forensic investigations to determine the extent of the breach
  • Legal expenses to navigate federal and state notification requirements
  • Notification expenses like postage, printing, and call centers
  • Credit monitoring and identity theft repair for affected parties
  • Public relations expenses to manage the fallout and restore your reputation

Privacy Liability coverage is equally important. This protects you from third-party costs arising from a cyber incident. For instance, if a data breach exposes customer or employee information, you could face legal actions or regulatory investigations. Privacy liability coverage helps with:

  • Defending against consumer class action lawsuits and funding potential settlements
  • Covering fines and penalties from regulatory investigations, such as those under GDPR or CPRA
  • Managing the costs of FTC privacy consent decrees and other legal penalties

Media Liability Coverage

Media liability insurance covers intellectual property (IP) infringement—other than patents—resulting from your advertising activities. This includes both online and printed advertising, and covers:

  • Social media posts that might inadvertently infringe on someone else’s IP
  • Online advertising that could lead to claims of defamation, libel, or slander

This coverage is vital for businesses that rely heavily on digital marketing and social media to promote their services.

Errors and Omissions Coverage

Errors and Omissions (E&O) coverage, also known as professional liability insurance, protects your business from claims related to service failures and contractual breaches. This is especially important if a cyber event prevents you from fulfilling your contractual obligations. E&O coverage includes:

  • Legal defense costs if you are sued for failing to deliver your services
  • Indemnification for settlements or judgments resulting from these lawsuits

For example, if a cyberattack disrupts your ability to provide consulting services to a client, E&O insurance can cover the legal expenses and potential damages.

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Understanding these key components ensures you have a comprehensive cyber liability insurance policy that protects your business from various cyber risks. Next, we’ll explore common exclusions and how to address them.

Common Exclusions in Cyber Liability Insurance

Cyber liability insurance is essential, but it’s important to know what’s not covered. This helps you avoid surprises and ensures you have the right protection. Here are some common exclusions:

Addressing Silent Cyber Issues

Future Profits:

Cyber insurance usually does not cover potential future lost profits. For example, if a cyberattack disrupts your business and you lose future sales, those losses are typically not covered.

Intellectual Property:

Loss of value due to the theft of your intellectual property is another common exclusion. If someone steals your trade secrets or patented technology, the financial loss from that theft is often not covered.

Silent Cyber:

The concept of “silent cyber” refers to traditional insurance policies that do not explicitly cover cyber incidents. These policies, like property liability or general liability, are often silent on whether they will cover damages from a cyberattack. This silence can lead to coverage gaps.

For instance, a business might assume its general liability policy covers cyber risks, only to find out it doesn’t after an incident. This has led to numerous lawsuits, as companies try to claim cyber damages under non-cyber policies.

Traditional Policies and Coverage Gaps:

Traditional policies might cover some aspects of a cyber incident, but they often leave critical gaps. For example, a property insurance policy might cover physical damage from a cyberattack but not the resulting data breach costs.

Legal Disputes:

These gaps can lead to legal disputes between businesses and insurers. Companies might sue to get their cyber claims covered under traditional policies, but success is uncertain. This is why having a dedicated cyber liability policy is crucial.

Understanding these exclusions and gaps helps you better prepare and ensure you have the right coverage. Next, we’ll look at enhancements and additional coverages that can fill these gaps.

Enhancements and Additional Coverages in Cyber Liability Policies

When it comes to cyber liability insurance, basic coverage might not be enough. Enhancements and additional coverages can provide extra protection tailored to your specific needs. Let’s dive into two key enhancements: Social Engineering Coverage and Reputational Harm Coverage.

Social Engineering Coverage

Social engineering is a fancy term for tricks that cybercriminals use to manipulate your employees. These tricks often lead to phishing attacks or funds transfer fraud.

Imagine an employee gets an email that looks like it’s from the CEO, asking to transfer money to a specific account. The employee, thinking it’s a legitimate request, complies. Later, you find out it was a scam, and the money is gone.

Social Engineering Coverage helps protect against these scenarios. It covers the loss of funds due to employee manipulation. This means if an employee is tricked into transferring money to a hacker, the insurance can help recover those funds.

Key Points:

  • Phishing: Protects against email scams that trick employees into revealing sensitive information.
  • Funds Transfer Fraud: Covers losses from unauthorized money transfers.
  • Employee Manipulation: Provides a safety net when employees are deceived by cybercriminals.

Reputational Harm Coverage

A cyber event can tarnish your brand’s reputation. Reputational Harm Coverage addresses the profit impact of such events.

Think of a well-known company that suffers a data breach. Customers might lose trust and stop buying their products. This leads to a significant drop in profits.

Reputational Harm Coverage compensates for the ongoing profit loss due to brand damage. It usually covers a specific period after the cyber event and helps manage crisis situations.

Key Points:

  • Brand Damage: Covers loss of income due to a damaged reputation.
  • Profit Impact: Compensates for reduced profits following a cyber event.
  • Crisis Management: Helps manage the fallout from a publicized breach.

Forensic Expenses

After a cyber incident, you need to understand what happened. This is where forensic expenses come in. They cover the costs of hiring an outside team to investigate the breach.

Key Points:

  • Discovery: Expenses to find out how the breach occurred.
  • Investigation: Costs of hiring professionals to understand the scope of the attack.
  • Resolution: Helps in identifying and fixing vulnerabilities.

These enhancements provide extra layers of protection that can be crucial in today’s digital world. Next, we’ll explore some frequently asked questions about cyber liability insurance.

Frequently Asked Questions about Cyber Liability Insurance

What is the difference between cyber liability and professional liability insurance?

Cyber liability insurance and professional liability insurance serve different purposes but are both crucial for business protection.

Cyber liability insurance covers risks related to cyber threats. This includes data breaches, ransomware attacks, and phishing scams. For example, if a hacker steals customer data, cyber liability insurance can cover the costs of notifying affected customers, legal fees, and even the expenses of restoring compromised data.

Professional liability insurance, also known as Errors and Omissions (E&O) insurance, protects against claims of negligence or mistakes in professional services. For instance, if an accountant makes an error in a client’s financial report, resulting in financial loss, professional liability insurance would cover legal defense costs and any settlements.

Key Differences:

  • Cyber Liability: Focuses on digital threats and data breaches.
  • Professional Liability: Focuses on errors and omissions in professional services.

How does cyber insurance support businesses during a data breach?

Cyber insurance can be a lifesaver during a data breach. Here are some ways it helps:

  1. Immediate Response: Covers the costs of notifying affected customers and providing credit monitoring services.

  2. Legal Defense: Pays for legal fees if your business is sued for failing to protect customer data.

  3. Forensic Investigation: Covers the expenses of hiring experts to identify the cause and scope of the breach.

  4. Public Relations: Helps manage your company’s reputation by covering the cost of a PR consultant.

  5. Business Interruption: Compensates for lost income if the breach disrupts your operations.

For example, in 2020, the FBI reported a 69% increase in cyber complaints due to the pandemic. Businesses with cyber insurance were better equipped to handle these incidents, ensuring quicker recovery and minimized financial impact.

What are the typical costs associated with cyber liability insurance?

The cost of cyber liability insurance varies based on several factors:

  1. Business Size: Larger businesses with more data to protect often pay higher premiums.

  2. Industry: High-risk industries like healthcare and finance may face higher costs due to the sensitive nature of the data they handle.

  3. Coverage Limits: Higher limits and broader coverage will increase the premium.

  4. Security Measures: Businesses with strong cybersecurity protocols may receive lower rates.

On average, small businesses can expect to pay around $1,740 per year for cyber liability insurance. However, this can vary widely. For a more accurate estimate, it’s best to consult with an insurance provider who can tailor the policy to your specific needs.

Next, we’ll delve into the conclusion and how Griffith E. Harris Insurance Services can help you navigate these complex insurance needs.


At Griffith E. Harris Insurance Services, we understand that navigating the complexities of cyber liability insurance can be daunting. Our goal is to simplify this process for you, ensuring that your business is protected against changing cyber threats.

Industry Expertise

With over 75 years of experience, we have built a deep understanding of the insurance industry. Our team of licensed insurance agents are knowledgeable industry veterans, most with over 10 years of experience. This extensive expertise allows us to stay ahead of the latest trends and threats in the cyber landscape, providing you with the most up-to-date advice and coverage options.

Tailored Coverage Solutions

We believe that insurance is not a one-size-fits-all solution. Each business has unique needs and risks, and we tailor our insurance programs to reflect that. Our custom “Personal Risk Management Planning” (PRMP) process ensures that all elements of risk and exposure are addressed long before a claim ever occurs. This proactive approach helps safeguard your assets and ensures that unforeseen circumstances will never jeopardize your legacy.

Comprehensive Support

From the initial consultation to policy selection and beyond, we are committed to providing prompt, courteous, and responsive service. Our dedicated team is here to support you every step of the way, helping you understand the nuances of your coverage and ensuring that you have the right protection in place.

To learn more about how Griffith E. Harris Insurance Services can help you navigate your cyber liability insurance needs, visit our Cyber Liability Insurance page or contact us for a free consultation today.

By choosing Griffith E. Harris Insurance Services, you are partnering with a team committed to protecting your business against the financial and operational impacts of cyber incidents. Let us help you stay secure and resilient in the digital age.

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