Businesses often interact with their customers online, and a lot of their internal operating activities take place over an online platform. They need to be prepared to handle the aftermath if something should go wrong and they are exposed to a cyber attack. Here are some reasons why a commercial insurance package may need to include a policy for cyber liability coverage.
Financial and Legal Liability May Be Extensive
A data breach can result in extremely costly liability to a business. Its internal losses from an attack could be very high, but it would be limited to the value of liquid assets. In contrast, its potential liability for third parties’ damages could be virtually limitless.
A Breach Can Necessitate Swift Action
As soon as a business learns about a breach, it may have to spring into action. First it needs to close off whatever vulnerability in its defenses allowed the breach. It’s also imperative to find out exactly what information was compromised in the breach. If a cyber criminal gained access to customers’ data, a business may need to send notifications to everyone who was affected.
With adequate insurance coverage, businesses will have the requisite resources to manage cyber liability. Insurance can address costs and damages for liability as well as the costs of investigation and