Any insurance policy can be difficult to understand. These policies use too much jargon and sometimes it doesn’t even seem like they’re written coherently. Policy language is unnecessarily tricky, but, as an individual or a company, you have to understand your policy details to know what your policy covers. Unfortunately, policy language is complex and insurees aren’t familiar with policy terms and definitions, which adds to the confusion. So, when you’re asking “How do I read my cyber policy?”, you can work with your cyber insurance broker and use the internet as a tool to understand what your policy says. In this article, we’ll go through what liability insurance is and how it differs from cyber insurance, some cyber insurance key terms, and what an insuring agreement can include. Afterward, you’ll be well on your way to understanding your cyber insurance policy.
Liability Insurance vs. Cyber Insurance
Liability Insurance
Companies usually have liability insurance to protect them in case they need to file some sort of claim or have a claim filed against them. General liability insurance covers a wide variety of business accidents that could cost a great deal of capital in legal fees, settlements, and payouts. General liability insurance can cover incidents such as property damage and customer injuries. For example, if a company’s property that’s important in conducting business was damaged, the company can file a claim with their general liability insurance provider for the cost of replacing or repairing the property to be covered. As another example, if a customer experiences a hurtful fall in a business, they can file a claim with the company’s insurance provider to cover their medical costs.
Cyber Insurance
Cyber insurance works similarly in that it protects a business’s digital business assets like company data, transaction information, and client and employee personal information in the event of a cyber attack. However, cyber insurance is usually not included in a company’s general liability policy. Cyber insurance is a whole other field of insurance, one that comes with distinct terms and technical language. As you wonder “How do I read my cyber policy,” know that you’re in the same boat as others. Just like general liability policies, cyber insurance policy language is confusing and hard to read through. Next, we’ll go through some cyber insurance key terms to get you started.
Cyber Insurance Key Terms
When you search “how do I read my cyber policy?” online, you often only find articles in which the writers repeat the very language and terms that you’re trying to decipher. This can be frustrating because you need to confidently understand your policy so you can determine if you have the necessary coverage and terms. You also might have questions for your insurer and broker, but feel that you can only ask them using the right terms to be specific. Without further ado, here are some cyber insurance key terms that will help you decode your cyber policy:
Business Interruption
When a cyberattack or other cyber security breach occurs, hackers can gain access to data and take, damage, or destroy it from a company’s network. If this data, such as translation or client information, is needed to continue business, this cyber attack could cause business dealings to stop. This is called business interruption because the company has lost the data needed to carry out business dealings. As a result, the business can experience a loss in profits, which is what their cyber policy likely covers. However, note that not all policies define what cyber attack types or cybersecurity breaches they cover.
Coverage Limits
A coverage limit describes the max amount of coverage or compensation that’s available for a cyber attack event. Here is where policy language can get even trickier. While your policy may cover up to $500,000 in “data restoration costs” in a cyber security breach, they might not define what “data restoration costs” they cover. For example, if your company decides to purchase better servers for data backups, your policy may not cover this purchase because it doesn’t consider server purchases as a valid data restoration cost. This is a great example of why it’s critical to understand the policy language, especially so you don’t experience any surprises during recuperation following a cybersecurity breach
Exclusions
Exclusions are more straightforward than coverage limits. Your policy most likely provides a list of events that aren’t covered by the policy. For example, an exclusion in a general liability policy is often employee injury. In cyber insurance, an exclusion could be a phishing scam. Exclusions depend on the policy.
Triggering Events
Lastly, a triggering event is an event that allows coverage to be applied. For example, your policy might say that your triggering event is a cyber security breach, but not define what cyber security breaches they mean. You can ask them to specify so you don’t have any room for doubt in your policy. Events like malware attacks and phishing attacks are examples of cyber attacks that you can ask your insurer if these count as triggering events.
Insuring Agreement
Insuring agreement is another jargony insurance term. An insuring agreement is a part of the policy that specifies that the insurer will provide coverage to you as the insuree. When you ask “how do I read my cuber policy,” this is perhaps one of the most important parts of your policy because your insurer pledges their ability to payout to you or your company. Be sure that this clause of the policy is solid so that your insurer doesn’t find any loopholes within the policy to evade payout. If you’re still unsure of any technical language used in this clause or others within your policy, you can consult your cyber insurance broker. Your cyber insurance broker is well-versed in cyber policy language and can help you go through your policy and insuring agreement in detail.
As you wonder “How do I read my cyber policy?”, you can always refer to this guide or talk with your cyber insurance broker. Policy language is convoluted and uses lots of jargon that doesn’t make sense to insurees. Understanding your cyber policy allows you to be confident in what it covers in the event of a cyber attack. It also helps you use specific language when you need to ask a question about or discuss your policy and digital business assets. Policy language is confusing, but don’t let that stop your company from being prepared in the event of a cyber attack.
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