Cyber Insurance vs. General Liability Insurance: What’s the difference, and why does it matter?
As cyber threats become increasingly prevalent and grow in severity and sophistication, businesses are looking for ways to protect themselves against potential data breaches and cyberattacks. Two common types of insurance that businesses may consider are cyber insurance and general liability insurance. While both types of insurance provide protection, they cover different types of risks. In this blog, we’ll take a closer look at the difference between cyber insurance and general liability insurance, and why it’s important for businesses to understand the distinction between the two.
General Liability Insurance
General liability insurance covers businesses against claims of bodily injury, property damage, and advertising injury. This type of insurance is typically required by law and intended to protect businesses against legal liability for accidents that may occur on their property or as a result of their operations.
General liability insurance may cover a wide range of incidents, such as slip-and-fall accidents, property damage caused by your employees, and advertising injuries, such as libel or slander. However, it typically does not cover losses related to cyberattacks.
Cyber Insurance
Cyber insurance, on the other hand, is specifically designed to protect businesses against losses related to cyberattacks. Coverage can include a wide range of incidents, from data breaches to cyber extortion to business interruption caused by a cyber incident. Cyber insurance policies may also cover a variety of expenses, such as forensic investigations, legal fees, notification costs, credit monitoring, and public relations expenses. Some policies also provide coverage for loss of income or extra expenses incurred as a result of a cyberattack.
Cyber insurance is crucial for several reasons including:
1. Financial Protection: In the event of a cyber attack or data breach, cyber insurance helps cover the costs associated with recovery, including legal fees, forensic investigations and customer notification.
2. Reputation Management: A cyber incident can damage a company’s reputation and erode trust with customers. Cyber insurance often includes coverage for public relations and crisis management expenses to help mitigate reputational harm.
3. Compliance Requirements: Many industries have regulatory requirements regarding data protection and breach notification. Cyber insurance can help businesses meet these obligations by covering fines and penalties associated with non-compliance.
4. Business Continuity: Cyber insurance can provide coverage for loss of income and additional expenses incurred because of a cyber incident. This ensures that businesses can continue operating while they recover from an attack.
5. Risk Transfer: Cyber insurance allows businesses to transfer some of the financial risk of cyber threads to an insurance provider, reducing the potential impact on their bottom line.
Overall, cyber insurance is an essential component of a comprehensive risk management strategy, providing financial protection, risk management support, and assistance in maintaining legal compliance and brand reputation in the face of evolving cyber threats.
The Difference Between Cyber Insurance and General Liability Insurance
As emphasized above, the main difference between cyber insurance and general liability insurance is the type of incidents that they cover. While both cyber insurance and general liability insurance offer protection against potential liability, cyber insurance specifically targets risks related to cyber threats and data breaches, whereas general liability insurance provides coverage for a broader range of liabilities, including bodily injury, property damage and advertising-related claims.
Why Does it Matter?
As cyber threats continue to grow in frequency and sophistication, it is becoming increasingly important for businesses to protect themselves against cyberattacks. While general liability insurance is an important form of protection for businesses, it is not sufficient to cover losses related to cyberattacks. Cyber insurance can provide an added layer specifically-designed protection.
By understanding these distinctions, businesses can better protect themselves against a wide range of threats. With the right insurance coverage in place, businesses can focus on what they do best, knowing that they are protected against the unexpected.
Download our free Cyber Insurance checklist to learn the safeguards that most cyber insurance providers require to in order qualify for insurance.
