What is Cyber Insurance?

Cyber insurance is a type of insurance that’s made for the 21st century, when almost every business is using computers and the internet. It’s specifically designed to guard against lots of the risks that come with conducting business online, such as possible data breaches and ransomware attacks (exactly what incidents are covered under a policy depend on the policy’s terms and conditions).

With the prevalence of computers in business, and frequency of data breaches and other incidents, it’s not surprising that cyber liability insurance is becoming more and more popular.

What Coverages Does Cyber Liability Insurance Provide?

As with all types of insurance, a cyber liability policy’s coverages are defined by the policy’s terms, conditions, exclusions, and limits. These vary from policy to policy, so coverages also vary.

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If a business suffers from a cyber attack, a cyber liability policy may provide coverage for some of the following:

  • Revenue lost due to limited or suspended operations
  • Revenue lost due to a tarnished reputation
  • Reparations given to customers who suffered a direct financial loss
  • Reparations given to customers whose data was compromised and, therefore, are at a greater risk of identity theft
  • Expenses for credit-monitoring programs given to customers who financial data was compromised
  • Expenses associated with hiring programmers to identify and fix the security weakness

Some cyber liability policies also cover ransomware attacks, which are attacks where hackers try to lock up a business’ data until a ransom is paid. Whether such an attack is covered by a policy depends both on the policy’s terms and conditions, and on the circumstances surrounding the attack and the business’ response to it. Businesses that are concerned about this risk should work closely with an insurance agent who can help them find a policy that provides coverage and understand what they must do to have an incident covered.

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Does Cyber Liability Insurance Cover Incidents Other Than Hacking?

In addition to the above-described incidents, many cyber liability policies also provide coverage for natural disasters, such as lightning strikes and power surges, and human error, like a company laptop being left behind at an airport by an employee. Policies that cover incidents like these often treat them similarly to security breaches, providing coverage for lost revenue, reparations, and associated expenses. Make sure to check your individual policy to see exactly what is covered to make sure that you don't have any holes in your coverage. 

Do Businesses With Commercial Property Insurance Need Cyber Liability Insurance?

Businesses that have commercial property insurance usually still need cyber liability insurance. Commercial property insurance policies often include at least some coverage for computers and electronics, but this coverage is typically limited to hardware. Computers, monitors, and servers might be protected, but the data stored on hard drives and servers usually isn’t protected by commercial property coverage. Cyber liability is the kind of insurance that’s designed to protect data stored on electronic devices.

What Businesses in New Jersey Need a Cyber Liability Policy?

Any business in New Jersey that uses computers and the internet should at least consider protecting itself from cyber threats. Even if a business’ main operations aren’t online, it may still be susceptible to a cyber attack as long as it has at least some digital data. A financial advisor in Princeton, NJ, store in Newark, NJ and a car dealership in Sussex, NJ might all need coverage, because they all may have customer information stored on computers or in the cloud.

How Can New Jersey Businesses Get Cyber Insurance?

New Jersey businesses that want to make sure they’re protected from data breaches and cyber attacks should talk with an independent insurance agent who is familiar with commercial insurance and the risks that businesses face in the 21st Century. A knowledgeable, independent agent can help a business assess its exposure to these risks and find a cyber insurance policy that will provide robust protection.

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The (Cyber) Threat is Real

In today’s digital age, computers are as essential to business’ infrastructure as anything else. They help businesses reach customers, manage inventory, schedule employees, forecast sales and order supplies -- and they expose businesses to additional risks. If a business’ computer system is compromised, the business may be directly affected or required to compensate people who are affected by the incident. Cyber insurance gives New Jersey businesses a way to protect themselves from many of the risks that are inherent with using computers and the internet. 

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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