What’s the Difference?
Any Cyber Insurance policy is filled with many kinds of coverage parts. These can range from the barest of coverage forms, generally those used by carriers who add it on to a package policy, to the broadest coverage forms used by the leading carriers today.
So how do you choose the right policy? How do you know what the exposures are? These and many other questions are left unanswered, and agents are not given the right tools to get the answers their commercial insureds need.
US Pro is America’s Cyber Insurance Experts. Today, we want to focus on a few important differences that will make a big difference in coverage when an event does occur.
The first step to having the right Cyber coverage is making sure that all the coverage parts needed are included in the policy. However, there is much more to this than just the coverage itself. A good understanding of how the coverage is triggered and by what events is what matters the most. Having the coverage included on the policy is great, but if an event is not a covered cause of loss that triggers the coverage to respond, the Insured is out of luck.
Limits of Liability
Cyber Liability policies are written with one overall aggregate limit for the policy period. Yet within this limit, coverage is then segregated between third party coverage and first party coverage components. Third party coverages have an aggregate limit, and first party coverages do as well. Together, they cannot exceed the policy aggregate, which in most cases is the same amount. Hidden within these general limit practices are the sub-limit of liability amounts for each specific coverage part. It is very important to understand which coverage parts are most likely to be triggered and then to maximize the best sublimit possible for these coverage parts.
Another big difference with the various Cyber forms is within the definitions themselves. Key definitions to consider include who is an Insured, the several types of Wrongful Acts covered, as well as what the Covered Causes of Loss are. While coverage can seem and sound broad in scope, the definitions of the policy can be limiting and in some cases exclusionary as compared to other Cyber forms.
Choosing the right coverage parts is the most important part of the Cyber process. Having strong coverage components is akin to laying the foundation of your entire Cyber program. Using the other considerations written about herein, building the policy with the right coverage parts triggered by broad events, strong coverage provided by the policy definitions, and effective and reasonable sub-limits is the best approach to take in creating your customer’s Cyber coverage.
Once you have built for your customer the right Cyber coverage, it must include strong Claims Management and response provisions. The Insurer should provide the policyholder with resources for immediate assistance in responding to and managing an event under the policy. Having strong Claims management and effective event response is the most important part of mitigating the potential financial impact and reputational harm to an Insured.
There are many other working parts to the Cyber policy, some of which have huge repercussions to an Insured when a claim does occur. Cyber is unlike any other insurance we have seen. It is a complicated Package policy for the intellectual property of an Insured, and no two carriers are the same. Expert product knowledge matters more in Cyber Liability than any other line of insurance a commercial insured can purchase.
It is imperative you make the right choice for your client. You must be an expert, or use someone who is. As America’s Cyber Insurance Experts, we invite you to choose us.