Many companies carry various forms of liability and cyber breach insurance. However, the time to validate your coverages and liabilities is before the event occurs. Next time you meet with your insurance broker review your policy with them and ask these pointed questions.
Often times traditional liability insurance does not cover you in the event that the claim against you is caused or originated from negligence, a defect or compromise of your IT systems. Make sure that your policy language is clear and that you have a full understanding of your risk and coverage.
Often times your insurance coverage will not cover the losses to your clients. It is important to review your contracts or terms of service with your clients to make sure that all parties are fully aware of how risk is apportioned in the event of a cyber incident or breach.
In the event that confidential data is compromised, depending on the nature of that data, you may have a legal or regulatory obligation to formally notify your impacted clients. This type of breach notification process can be both lengthy and very expensive to perform. Make sure that you are covered in such an event and that you have a clear understanding of your policy.
You should talk through any likely or worst case scenarios with your qualified attorney or insurance provider to assure that you have a full understanding of the legal protections and apportioning of risk contained in your customer agreements and terms of service. This is a very important step to complete before you have an incident or issue so that you can take appropriate steps to mitigate the risks to your business and your clients proactively.
AlasConnect is neither a law firm nor an insurance broker/agent. This page is intended for informational purposes only. You should contact your lawyer and/or insurance provider for any advice, questions or concerns relating to a specific issue, policy or problem.