Quote from Cyber and Data Breach Liability Insurance: Protecting Small Businesses and Our Nation.
“All organizations have the responsibility to be aware of their cyber and data breach risks, to protect themselves, and if applicable, to be in compliance with state, federal and industry regulations. They also have the responsibility to work with other companies within their business ecosystem and supply chain, including individuals, to ensure they are also doing the same. Insurance is a part of an overall cyber and data breach risk management plan.
Many governments and larger private corporations now include a Cyber and Data Breach Liability Insurance requirement in bid specifications as a prerequisite to a subcontractor providing any goods or services to them. This requirement is being put in place in order to help provide additional resources and financial protection to ensure the sustainability of the smaller sub-contractor post-breach, thus helping to protect the larger company’s overall supply chain. It is common business practice to transfer business risk to the insurance industry, much as companies would do with other risk concerns such as insuring property (against fire, theft, flood or other damages), or insuring the business against General Liability, Professional Liability, Employment Practices Liability, Workers Compensation or other types of losses. These types of insurance are typically required to be in place by a contractor in order to secure or maintain a contract with a larger contracting entity.
Understanding the complexities of how Cyber and Data Breach Liability Insurance is procured, what should be covered by a policy, along with what can be required in contracting specifications, is important for all involved parties.
It should be understood no representation is made that the minimum insurance requirements recommended in this survey are sufficient to cover the indemnity or other obligations of the small and midsize subcontractor.” Charlie Tupitza, Licenced insurance consultant Commonwealth of Virginia.