Cyber Liability: Maybe Not for Fred Flintstone, But for Everyone Else?

Cyber Liability: Maybe Not for Fred Flintstone, But for Everyone Else?



Cyber liability insurance. Do I need to buy it? Unless your company is not using electronic data, hello, Fred Flintstone, the answer is likely yes. What types of activities make your business vulnerable to data breaches and cyber-attacks? What coverage may you typically find in a cyber liability policy? Cyber liability coverage is in  easingly important for any business that uses electronic equipment to conduct its operations. That means virtually everybody.

Do you do one or more of the following:

  • Communicate with customers via email, text messages or social media
  • Send or receive documents electronically
  • Advertise your company via electronic media, such as a website or social media
  • Store your company’s data on a computer network. Examples of company data are sales projections, accounting records, tax documents, and trade secrets.
  • Store data that belongs to others (such as employees or customers) on a computer network. This data may include customer names and addresses, customers’ credit card numbers, employees’ birth dates and social security numbers, and other sensitive information.
  • Sell products or services through a company website

These activities can help your business or organization operate efficiently. Yet, they also generate risks. Additionally, you could incur large out-of-pocket expenses to repair or restore lost or damaged data.

Cyber liability insurance covers lawsuits stemming from events such as data breaches, the inability to access data, or the failure to adequately protect data from thieves. Such lawsuits are not covered by a standard commercial general liability (CGL) policy.

For one thing, damage to electronic data does not qualify as property damage under a CGL policy. Why? Electronic data is not considered tangible property. Secondly, most CGL policies contain a specific electronic data exclusion. This exclusion eliminates coverage for claims “based on the loss, damage or corruption of data or the inability to use it.”


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