Information that is stored digitally on computers, in the cloud, etc. are at risk of being stolen. Private data that can be used to benefit a hacker who broke through cyber security can include payment information, social security numbers, passwords and more, leading to stolen money and identities, as well as angry customers and legal expenses. However, with data breach insurance, things can be handled more smoothly.
Without Cyber Insurance
If a business experiences a data breach, they will find that their general liability or property insurance does not cover stolen goods that are not physical. They will be forced to pay for forensic services to identify the data breach and figure out what was lost, often leading to paying out-of-pocket for any damaged equipment and stolen funds. They will then have to pay to notify their customers of the attack, leading to repaying them for anything they lost. If any third-party takes legal action, then the business will also need to pay for court fees and settlements.
With Cyber Insurance
When a business has data breach insurance, however, these expenses are typically all covered by the insurance. They can work quickly in reaction, as the services to identify the data breach are included as a part of cyber insurance. Since most businesses are legally required to notify others affected by the data breach, this is also handled within the policy. With third-party cyber insurance, any legal expenses are covered, as well.