Below is an example of how one prominent underwriter segregates between a financial loss and an actual tangible property loss or bodily injury.
Sample coverage for financial loss
Third party loss resulting from a security breach includes:
• Defense costs and damages if the business or its outsource handling firm causes a breach of personal or corporate data.
• Defense costs and damages if the business contaminates someone else’s data with a virus.
• Defense costs and damages if the business suffers a theft of system access code by non electronic means.
Cyber coverage is unique in that carriers offer different products, since it is still a fairly new insurance product. Generally, you purchase coverages like a cafeteria plan, in which you can select various products. It can be a little hard to compare carrier options because they’re not uniform.
Event management costs— There are more coverages with respect to the cyber event management, such as:
• The cost of notification, public relations, and other services to manage/mitigate a cyber incident.
• Expenses to restore, recreate, or recollect lost electronic data.
• Forensic investigations, legal consultations, and identity monitoring costs for breach victims.
Network or business interruption—
• Loss of net profit and extra expense as a result of material interruption to the insured’s network caused by a security breach. Now, you’ll notice that it’s net profit loss, because they’re going to compensate you for your net loss. This would be your gross sales, less expenses.
Cyber and privacy extortion—
• Ransom payments (extortion loss) to third parties incurred in efforts to terminate a security or privacy threat. This is another item a little bit like kidnapping and ransom, for a lack of […]