Reading your Cyber Insurance Policy

When you get your insurance policy and try to read it, you will confront some tedious reading. In order to understand the protection you have purchased, here is an effort to summarize it all for your better understanding.

• Declarations Page - the first few pages contain the main details you need to know about your policy at a glance. Your company’s name and address, as well as the limits, retentions and premium of the policy.
• Policy Limit - the amount up to which the insurance company will pay if you have a loss. (For example, if you have a $1,000,000 limit, they will pay for damages that go up to that amount, but no more).
• Policy retention - the "retention" or "deductible" is how much you have to pay out of pocket when you have a loss. Insurance policies include this amount so that policy holder's have an incentive to exercise diligence in avoiding losses. (For example, if the retention amount is $5000, you have to pay up to $5000 for any loss you have, and then the policy will cover anything beyond that amount.)
• Policy premium - how much you pay per year for your insurance. The policy premium is based on how much coverage you get. The more coverage you get, the more you pay. Strive to get as much coverage as you need, to keep your premiums as low as possible. But don't scrimp too much.

• Your cyber insurance policy is based on how you filled out your original application. When you fill out your insurance application, make sure you answer all the questions accurately. You will need to indicate annual income, description of business operations, personal information held (social security numbers, credit card info, employee personal health data, bank account information, home addresses). You will be asked to indicate your computer security controls, privacy policies, the internet media you use, any regulatory issues you have, any prior claims or prior insurance. Let your agent know when any of this information changes.

• Your Policy Outlined - in the body of the policy, you will find the following things described. Your insurance agent and underwriter understand what these things mean, but for your own reference, here is a run-down of the vital matters:

• Insuring Agreements
• Information Security & Privacy Liability
• Privacy Notification Costs.
• Regulatory Defense and Penalties
• Website Media Content Liability

• Defense and Settlement of Claims
• This section describes how the insurance company will legally defend you to reduce the amount of money that you both have to pay out. They will do everything in their power to reduce damages.

• Exclusions
• This section lists all the things that the policy does not cover. Because a Cyber insurance policy is designed to protect you from specific kinds of IT risk, it does not cover the property and general liability risks that your normal business owners policy covers.
• This section also lists the things that will not be covered due to your own dishonesty or fraud.
• Definitions
• This section is like a glossary that lists terms used in the policy and gives a definition for them. This is good to review so that you can feel conversant in the terminology of the policy.
• Limit of Liabiltiy
• This section describes in depth what was indicated on the Declarations Page, the Aggregate Limit of Liability. Aggregate Limit means the total amount the policy will pay out in a given year.
• Retention
• This section described in detail the Retention that was indicated on the Declarations Page, that is, the amount that you are responsible for paying if you have a loss. Some policies will have no retention, others will have one.
• Notice of Claim, Loss or Circumstance that might lead to a Claim
• This deals with how you need to notify the insurance company if you have a loss. For you as the owner of this insurance policy, all you need to do is notify your agent as soon as you have a loss or think you might have one, so he can take it from there.
• Assistance and Cooperation
• This describes how you have to cooperate with the insurance company if you have a loss.
• Subrogation
• This describes how the insurance company will go after other companies who may be at fault if you have a loss.
• Other Insurance
• This describes how the insurance payouts will work if you have other insurance policies in addition to this one.
• Mergers and Acquisitions
• This section describes how you need to structure your insurance if you buy a new subsidiary or if you merge with another company. Should you do either of these things, contact your agent, so they can review all of your insurance will you and re-adjust the policy to your new situation.