California Property & Casualty Broker-AgentCasualty InsuranceMedium
A California business client operates a consulting firm. They have a Commercial General Liability (CGL) policy and are considering adding coverage for claims arising from their failure to protect sensitive customer data. Which type of policy or endorsement would best address this specific exposure?
- AProfessional Liability Policy
- BBusiness Owner's Policy (BOP)
- CCyber Liability Policy
- DCommercial Property Policy
Show answer & explanationAnswer & explanation
Correct answer: C. Cyber Liability Policy
Failure to protect sensitive customer data, leading to breaches or privacy violations, is a primary concern addressed by Cyber Liability (or Data Breach) policies. CGL policies typically have exclusions for such exposures.
Why the other options are wrong
- A. Professional Liability covers errors/omissions in professional services, not typically data security failures unless directly tied to the *delivery* of a specific IT service.
- B. A BOP combines CGL and Commercial Property, but standard BOPs do not adequately cover cyber liability.
- D. Commercial Property covers physical assets, not data breach liability.
Cyber Liability Insurance
Cyber Liability insurance provides coverage for financial losses and expenses arising from data breaches, cyberattacks, network security failures, and privacy violations.
- Covers costs like notification, credit monitoring, legal fees, regulatory fines.
- Often includes business interruption from cyber incidents.
- Standard CGL policies typically exclude these risks.
Memory trick: Cyber safeguards all your digital secrets.