No business is safe from cyberattacks and privacy breaches as cybercriminals grow more sophisticated each day and breaches can and may happen regardless of the identity or location of the targeted corporation. Cyber insurance policies offer corporations a comprehensive way to respond to cyberattacks. A cyber insurance policy just may be what keeps corporations from shutting down due to their inability to financially endure the related costs of a breach.
General liability insurance policies protect both first and third parties in cases of property damage or injury that occur as a result of the corporation’s operations. General liability insurance policies generally cover tangible property, and it has been difficult for courts to consider cyberattacks and data preaches as tangible property. This has been reflected in the United States such as in the cases of Sony PlayStation data leak (2011) and Am. Online, Inc. v. St. Paul Mercury Ins. Co. (2002).
On the other hand, cyber insurance policies are growing in both necessity and popularity due to the continuous change and growth of technology. The rise of cyber insurance policies may also be attributable to the exposure faced by corporation’s that adopt an online operational system and store sensitive client data on the corporation’s computer network. The demand for cyber insurance policies has grown as a result of the growing sophistication of cybercriminals, their increased attacks, and the potential for an oversight in the event of a data breach.
Ultimately, corporations should be motivated to obtain adequate cyber insurance policies that fit their needs and will provide insurance against losses stemming from data breaches. General liability insurance policies will unlikely cover the losses resulting from the cyberattack and the breaches on the corporation’s data.
Corporations face considerable risks when it comes to being subjected to cyberattacks as such attacks tend to cause business interruptions and can amount in loss of business secrets and intellectual property. Obtaining a cyber insurance policy is a solution that does not always involve software and is overlooked by many corporations. It ought to be noted that buying an ‘off-the-shelf’ insurance policy is rarely the best approach for a corporation to protect and mend itself from cyberattacks. Therefore, corporations should critically understand the differences among the various cyber insurance policies when making their optimum decision.