Property & Casualty

Emerging Coverages

Cyber Liability Insurance

Most people are aware of "data breaches" that have occurred with large national retail store and credit services, along with other problems that are reported in the news. A hacker attacks a business' computer to do one or more of the following: shut down the business' computer system, shut down the operation of the business, steal customer personal information, deface website/social media, and extort money by use of ransomware.

Cyber Liability Insurance policies vary in language on exactly what is covered. The North Carolina Department of Insurance advises the best course of action is to contact an insurance agent who is well versed in cyber liability insurance to discuss the many different coverage options.

If you have questions or need assistance with cyber liability insurance email us at CyberLiability@ncdoi.gov.

FREQUENTLY ASKED QUESTIONS

The NCDOI has reviewed multiple types of coverage forms submitted by insurance companies. For example, it may provide coverage for “First Party” (an insured business) and “Third Party” (an insured business’ customers/general public).

FIRST PARTY
  • Cyber Incident Response Fund- pays for cyber incident response expenses incurred (cyber incident is network security failure, protected information, interruption in service)
  • Business Interruption and Extra Expenses- pays for business interruption loss and extra expenses incurred during period of restoration
  • Digital Data Recovery- pays for digital data recovery costs incurred
  • Network Extortion- reimburses for extortion expenses incurred in response to a Cyber Incident
THIRD PARTY
  • Cyber, Privacy and Network Security Liability- pays for damages claimed against a business for a cyber incident (network security failure, protected information, interruption in service)
  • Electronic, Social and Printed Media Liability- pays for damages claimed against a business for a media incident (any error, misstatement, misleading statement, act, omission, neglect or breach of duty)

Cyber Liability Insurance is currently NOT available on a homeowners policy. However, “Identity Fraud” may be available to individual consumers. Identity Fraud is intended to provide certain types of coverage if your personal information is stolen.

Below is an example of Identity Fraud language in a policy:

"Identity fraud" means the act of knowingly transferring or using, without lawful authority, a means of identification of an "insured" with the intent:

  1. To commit: or
  2. To aid or abet another to commit:
    any unlawful activity that constitutes a violation of federal law or a felony under any applicable state or local law; or a violation of a state or local law regarding identity fraud.
IDENTITY FRAUD EXPENSE

We will pay up to $15,000 for "expenses" incurred by an "insured" as the direct result of any one "identity fraud" first discovered or learned of during the policy period. Any act or series of acts committed by one or more persons, or in which such person or persons are aiding or abetting others against an "insured", is considered to be one "identity fraud", even if a series of acts continues into a subsequent policy period.

*Please remember these are examples and may not reflect the language in your specific policy. Please refer to your specific policy for coverage language.