Page 29 - Spring 2025

How Does Cyber Insurance Work?

BY TRAVELERS INSURANCE
An ACB Preferred Solu�ons Provider

Having dis�nct insuring agreements helps protect against a diverse
The cost of dealing with a data breach goes beyond
set of risks.
repairing databases, strengthening security procedures or replacing
lost laptops. Regula�ons requiring no�fica�ons to affected An extended repor�ng period gives companies more �me to detect
customers also drive up costs for companies when a data breach and report a data breach. It extends the repor�ng period, typically
compromises personal or confiden�al data. Tradi�onal business 90 days, and includes crisis management and security breach
insurance may not be enough to protect companies from cyber expense coverage.
crime. But just how does cyber insurance work?
Given the nature of data breaches, a company might not realize that
Typically, there are a number of different coverages available. To it suffered a breach un�l a�er the end of the cyber policy.
have the coverage that is right for your company, you and your
agent can work together to tailor the coverages based on the First-party coverage for computer program and electronic data
specific risks your business faces. Following are some explana�ons restora�on expenses reimburses companies for expenses related to
of typical elements of a Travelers cyber insurance policy. recovering from damages to computer programs and electronic
data.
Companies have an obliga�on to keep their customers’ protected
health informa�on (PHI) and personally iden�fiable informa�on (PII) Not all cyber claims are related to an actual data breach. For
confiden�al. They may face poten�al liability if the informa�on is example, malware downloaded from an email could lead to lost,
exposed in a data breach. This coverage protects companies for encrypted or otherwise damaged files, requiring expenses to repair
liability to others and reimburses companies for expenses related to and restore.
a data breach, which could include legal counsel and defense, a
Business interrup�on coverage applies to expenses and lost revenue
digital forensics team, no�fica�on costs, crisis communica�ons and
due to a computer virus or denial-of-service a�ack that impairs a
se�ng up a call center and credit monitoring for those affected by
computer system.
the data breach.
While many companies may have business interrup�on coverage as
Claims and events can occur anywhere in the world, and no�fica�on
part of their property coverage, cyber crimes may not be covered.
requirements differ by loca�on. To help fulfill these requirements,
policyholders can access Travelers’ network of forensics, crisis Your coverage for security breach remedia�on and no�fica�on
communica�ons and legal experts to address claims made or events expenses would include purchasing an iden�ty fraud insurance
occurring anywhere in the world. policy, credit monitoring services, computer forensics and access to
a Breach Coach for advice regarding ini�al breach response.
If a company has a data breach, it must follow the privacy laws that
govern where its customers live, not just where it is headquartered. Cyber insurance also can help protect you before a breach. Travelers
This can be costly, confusing and �me-consuming for a company customers have access to risk management services, cyber security
without specialized resources. experts and other resources to help prevent a data breach. Perhaps
just as importantly, having cyber insurance can help prepare your
Travelers CyberRisk insurance against cybera�acks also includes
company to respond effec�vely in the cri�cal hours and days
be�erment coverage. This provides for costs to improve a computer
following a data breach.
system a�er a security breach, when improvements are
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recommended to eliminate vulnerabili�es that could lead to further
breaches. Travelers is an ACB Preferred Solu�ons Provider.
Having separate insuring agreements allows companies to be
covered for different risks, at different levels. This gives companies
more protec�on as companies can choose to set a higher limit for a
specific risk, based on their business’ unique needs.
There are a number of different ways that cyber crime can affect a
company, from e-commerce extor�on to funds transfer fraud.

Arkansas Community Banker | 29 | Spring 2025