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Does Office Business Insurance Cover a Data Breach?

Apr. 18, 2016

Not without separate privacy breach or breach response insurance also referred to as Cyber Liability Insurance.

What does business insurance cover?

The foundation of business insurance is General Liability Coverage. General Liability insurance compensates you for attorneys’ fees, court costs, and settlements or judgments up to your limit of liability. It responds when a third party (any business or person who doesn’t own or work for your business) sues you over the following:

Bundled Business Insurance gives you more

When General Liability Insurance is bundled with other coverages (called a Business Owner’s Policy or BOP) it’s cheaper for the policyholder. Though a BOP is a comprehensive and affordable option, it’s not available to all business owners. To qualify for this coverage, you must own a small business (which means your premises are small and you don’t have a lot of employees) and work in a low-risk industry.

A BOP typically includes

Comprehensive General Liability Insurance as an even broader option

Comprehensive General Liability Insurance (CGL) is a broader coverage option than the BOP for larger, more hazardous businesses.

CGL Typically includes

CGL does not cover 

Why is a privacy breach directly related to information stored or used by my business not covered by CGL or BOP insurance?

While a CGL policy today should cover invasion of privacy claims arising out of a data breach, it will not cover loss of data because data is not tangible property. Tangible property actually excludes electronic  data ( information stored, created, used, or transmitted to or from computer software). General Liability Insurance will also not cover:

Commercial Crime Policy to cover some costs of a data breach but not all

Commercial Crime Policy typically covers

Commerical Crime Policy does not cover

Cyber Liability Insurance is the only fully comprehensive solution

There are numerous cyber/breach response insurance products on the market that better respond to the risks associated with data breaches. A policy offering  privacy coverage will cover the costs associated with regulatory investigations, fines and penalties and, additionally will commonly offer “remediation coverage” such as:

Cyber Liability risks are a real threat today to businesses of all size and from any industry. An independent insurance broker specializing in Privacy Breach or Breach Response Insurance can help you find the right insurance for cyber risk. Request a broker by filling out our short form.

Author

Cindy Wiedman, LiabilityPro Insurance Advisors, President

Cindy Wiedman, founded Wiedman Insurance Services, LLC (LiabilityPro Insurance Advisors*) August 1, 2014. Cindy is a Registered Professional Liability Underwriter (RPLU) and has designed and administered professional liability insurance programs over a 35-year career working for various insurance administrators in the Midwest such as Shand Morahan & Company, Kirke Van Orsdel, Marsh and Lockton Affinity.

*Currently working with investment advisory businesses domiciled in Iowa, Minnesota, Kansas, Illinois and Nebraska.

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