Texas General Lines — Property and CasualtyCommercial LinesHard
A mid-sized manufacturing company experiences a significant data breach due to a cyberattack, compromising sensitive customer information. The attack also causes a complete shutdown of their production line for several days. Which specific type of commercial insurance would cover the costs associated with notifying affected customers and the loss of income from the production shutdown?
- AErrors and Omissions (E&O)
- BCyber Liability Insurance
- CCommercial General Liability (CGL)
- DBusinessowners Policy (BOP)
Show answer & explanationAnswer & explanation
Correct answer: B. Cyber Liability Insurance
Cyber Liability Insurance is specifically designed to cover losses arising from data breaches, cyberattacks, and other cyber-related incidents. This includes expenses like customer notification, forensic investigation, public relations, regulatory fines, and business interruption (loss of income) due to a cyber event.
Why the other options are wrong
- A. E&O covers professional negligence, not direct financial losses or business interruption from a cyberattack.
- C. CGL policies typically exclude cyber-related risks and data breaches, as they focus on physical bodily injury and property damage.
- D. While a BOP bundles property and liability, it generally excludes or has very limited coverage for cyber risks unless specifically endorsed, which is often insufficient for a significant breach.
Cyber Liability Insurance
A specialized insurance policy that protects businesses from financial losses and expenses arising from cyber incidents, such as data breaches, cyberattacks, network security failures, and business interruption due to these events.
- Covers first-party costs (e.g., forensic, notification, business interruption).
- Covers third-party liability (e.g., lawsuits from affected customers).
- Essential for businesses handling sensitive data or relying on technology.
Memory trick: When cyber threats loom, 'Cyber Liability' saves from gloom.