Understanding Cyber Insurance

As I speak with small to medium size business(SMB) owners about cyber breach, I’ve discovered there’s some misunderstanding about their risk and how their current insurance program will respond to this type of loss. Often they believe that their general liability policy will protect them or that they’ve got coverage under their media liability or directors and officers liability policies. They are potentially both wrong and right. There may be some insurance protection available under other policies, but there are frequently significant gaps in coverage that could leave an SMB at risk of financial and reputational damage.

At a minimum, general liability, media liability and directors and officers liability insurance won’t address your 1st party exposures such as notification costs or forensic investigation fees when a breach occurs. According to the Ponemon Institute, data breach incidents cost U.S. companies $214 per compromised customer record—and without 1st party coverage (1st party exposures make up a very sizeable portion of the $214 per record), the brunt of a breach will fall squarely on the business. Some general liability policies may not cover 3rd party liability altogether.  For example, the property damage component under a general liability policy requires damage to “tangible” property as opposed to “intangible” property such as data. SMBs that purchase a media liability insurance policy with cyber liability coverage may not realize that in some cases the cyber liability policy may share a single limit of liability with the media liability policy—this could create a financial hardship for the SMB if it is faced with multiple losses which could quickly eat up this single shared limit.

Cyber gaps can be a costly exposure for a business. If you’re not sure about your cyber liability coverage, talk to your agent or broker to make sure you don’t have any gaps.

Ken Goldstein is a vice president for Chubb Specialty Insurance.


About Ken Goldstein

Worldwide media liability manager for Chubb Specialty Insurance, the executive protection and professional liability underwriting division of The Chubb Group of Insurance Companies. Responsible for Chubb's news media, multimedia, video and film, Internet, and new media business.
Categories: General Risk
Tags: , ,

5 Responses to Understanding Cyber Insurance

  1. Pingback: Industry Exposure: Business Blog – Cyber Breach Preparedness – RiskConversation.com

  2. Great article. For those interested, we just published our 2012 white paper on Privacy- What Every Agent Should Know about Privacy it can be download free at:


  3. Pingback: Chubb Survey: Concern of Cyber Risk Not Leading to Insurance Buy | Insurance

  4. Pingback: Chubb | Understanding Cyber Insurance

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>