The Proof is in the Policy
Understanding Cyber Insurance policies is a daunting task. The policy language from carrier to carrier is unique. New carriers continue to emerge, and new policy forms are born, exasperating the problem for the retail insurance agent. Wholesale brokers are not specialists in the coverage, and carriers themselves do not provide comparisons of their forms to others.
So how do you determine what form is better than another? The common practice is to look globally at the coverage parts provided and the limit of liability for those coverages. This approach is useful in understanding basic coverage or limit differences, but the important part of understanding the coverage is to dive much deeper into the policy.
Let’s take a minute to review Cyber Liability in its simplest form. Cyber Liability Insurance is a COMMERCIAL PACKAGE POLICY that protects the Insured’s digital assets from a variety of potential risks. Some of these are liability-based coverages in nature, and some of these are property-based coverages. Each of the 3 liability coverages have a limit of liability, and all of the first-party costs coverage have their own limits. All of the sub-limits are subject to a policy aggregate.
From this foundation, start asking yourself some more important questions, such as:
- What kind of wrongful acts are included in Multimedia Liability coverage? What kind of Media is included?
- What is included in a Security Breach? What is included in a Privacy Breach?
- What triggers the first party coverage components?
- Are prior acts covered?
These are just a few of the important questions to consider. Many others are appropriate to review from coverage part to coverage part. Recommending the wrong Cyber coverage can be a costly error for the agent to make.
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