CYBER INSURANCE

Cyber Insurance and Data Breach Insurance Explained

Cyber Liability Insurance is a specialized policy that helps businesses protect against financial losses resulting from cyberattacks, data breaches, and other cyber-related incidents. From small businesses to financial institutions; any business that collects or stores sensitive data, such as customer records, payment information, or employee data can benefit from cyber insurance.

General Coverages

Pursuant to your particular policy language, coverage provisions, and exclusions; employment practices liability policies can include coverage for:

First-Party Coverages (Protecting Your Business)
These coverages help businesses recover from direct cyber incidents, such as data breaches and ransomware attacks.

• Data Breach Response – Covers forensic investigations, legal expenses, and crisis management costs after a data breach.
• Business Interruption – Reimburses lost income and extra expenses if a cyber event disrupts business operations.
• Ransomware & Cyber Extortion – Pays for ransom payments and the cost of negotiating with hackers.
• Data Recovery & Restoration – Covers the costs to restore or replace compromised data.
• Public Relations & Crisis Management – Pays for PR services to manage reputational damage.
• Fraud & Social Engineering Attacks – Protects against financial losses due to phishing scams or fraudulent fund transfers.

Third-Party Coverages (Protecting Against Lawsuits & Regulatory Fines)

These coverages protect businesses from liability claims filed by customers, clients, or regulatory agencies.

• Network Security Liability – Covers lawsuits resulting from a failure to prevent a cyberattack, including malware or data theft affecting third parties.
• Privacy Liability – Covers claims from customers or employees whose personal data was exposed.
• Regulatory Fines & Penalties – Pays fines and penalties for violating privacy laws (GDPR, HIPAA, CCPA, etc.).
• Media Liability – Covers claims related to intellectual property infringement, defamation, or copyright violations due to online content.
• Legal Defense Costs – Pays for legal fees and settlements if sued for a cyber-related incident.

Claims Scenario

A mid-sized law firm stores highly sensitive client information, including contracts, financial records, and personal identification data. One morning, employees are unable to access their files—hackers have encrypted all the firm’s data and demand a $500,000 ransom in Bitcoin to restore access.

The firm receives a ransom demand from cybercriminals. Client data, including confidential legal documents are all at risk. Business operations are completely halted, preventing attorneys from working on cases.

How Cyber Insurance Helps:

• Ransomware & Cyber Extortion Coverage – The insurer provides specialized negotiators to assess the threat and potentially cover the ransom payment.
• Forensic Investigation – Cybersecurity experts investigate how the breach occurred and identify vulnerabilities.
• Data Recovery & Restoration – IT specialists work to decrypt and restore the firm’s data.
• Business Interruption Coverage – The law firm is reimbursed for lost revenue during downtime.
• Legal & Notification Costs – The insurer covers the costs of notifying affected clients and handling potential privacy lawsuits.

With cyber insurance, the law firm recovers quickly, avoids significant financial losses, and maintains client trust. Without coverage, the firm would have faced crippling legal fees, lost business, and reputational damage.

Contact CastleWise to discuss cyber insurance coverage.