Cyber Crime and Cyber Terrorism

WHAT DOES CYBER LIABILITY INSURANCE COVER?
It is important to state at this stage that CL Insurance should not be seen as a method 
for organizations to simply transfer their risks to an insurer and make no other effort 
to protect themselves against potential incidents. Like many insurance products, CL 
Insurance products carry a series of exemptions and exclusions to protect the insurer 
from underwriting bad risks. Cyber Liability insurance is intended to mitigate losses 
from a variety of cyber-related incidents including those stated previously. With the 
new regulation on the horizon and the increasingly complex and interconnected en-
vironment businesses operate in; it is easy to see why cyber insurance is so desirable 
to businesses.
A good CL Insurance product should protect against the financial impact of a 
data leak, a data loss or a breach of a company’s IT system and may include ancillary 
cover for such elements as Cyber Extortion or costs associated with PR management. 
Current products vary in what they will and will not cover, but essentially range from 
the loss of information from an individual laptop to the hacking of an entire network 

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CHAPTER 16
The rise of cyber liability insurance
or cloud storage facility. The impact of any of the above can have a serious effect on 
a company’s IT system, their market reputation and most importantly their financial 
stability.
The impact of a data breach can be far reaching but Cyber liability coverage es-
sentially falls into three distinct areas of cover:
• 
Loss or Damage of Data
—Data which is lost, stolen, corrupted or damaged by 
any means including intentional or unintentional actions. Costs incurred may 
include compensation claims, fines, investigations, remediation or recovery 
costs.
• 
Cyber Extortion
—An increasing risk where hackers or “hacktivists” threaten 
to disrupt your business by introducing a virus or shutting down your website 
via a “Denial of Service” (DoS) attack, unless a sum of money is provided. 
Additional risks include the threat of having defamatory (or inappropriate) 
material injected into their websites or online catalogues to discredit the 
company. Cyber Extortion also includes the release of confidential information 
unless a fee is paid.
•