Why is the Popularity of Cyber Liability Insurance on Rise?

By Insurance CIO Outlook | Wednesday, June 10, 2020

The sudden rise in the number of cyberattacks has triggered the endorsement of cyber liability insurance among enterprises.  

FREMONT, CA: There has been a significant increase in the number of hacking efforts in the past few years. While such attacks can severely impact the operations, they can also tarnish the image of a firm. Further, almost all businesses use information technology (IT) to provide service or information through a website, communicate via email and other platforms with the clients and the customers. In case of any security compromise, businesses can be held liable. The sensitive data handled by the business may include sensitive information such as account details, credit card numbers, payroll, and personal information. Cyber liability insurance policies help in bolstering data security.     

Cyber liability insurance offers a layer of protection for digital assets. Further, cyber liability insurance also enables firms to reduce the financial impact of a business interruption due to any cyber attack. A business that handles and processes financial or personal information of clients, customers, or employees can benefit the most from cyber liability insurance. There could be instances when small enterprises miss updating their software regularly or investing in data encryption. Thus, such firms are more vulnerable to legal fees and expensive settlement in case of cyberattacks.    

The digital age makes it easier for firms to go for cyber liability insurance. However, it is essential for a firm to consider various factors that impact the business operations and choose the right coverage. Firms can also use online consultants to make the right coverage choice and safeguard their business from the legal and consequences of an attack.

Thus, cyber liability insurance is gaining traction, especially among new businesses. Amidst an increase in the number of cyberattacks, firms are leveraging insurance coverage to offset the impacts of fraudulent online activities.

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