By James R. Murray and Kristin C. Davis
Over the past decade, social media websites such as Facebook, Twitter and YouTube have gone from big news to many people's only source of news. These days you are just as likely to come across an Internet posting from your child as you are from a Fortune 500 company.
Everyone seems to be taking advantage of the connectivity and information the Internet and, specifically, social media offer. Of course, with the increasing use and reliance on social media, there come increasing costs and risks.
Cyber liability risks come in many shapes and sizes. The proliferation of state, federal and international privacy laws means increased obligations and risk for companies and individuals in cyberspace.
For companies that store personal or financial information, a data breach can mean liability to thousands of people. Sometimes a data breach is a result of a resentful or careless employee, other times an anonymous hacker, or just a side-effect of a software malfunction. For companies and individuals alike, the release of private or incorrect information on Facebook or Twitter, whether intentional or not, could lead to expensive lawsuits. Even relying on storing information online can result in significant business delays if a network outage or software malfunction occurs.
Thus, for all policyholders, it is important to remember that where there is risk, there is often insurance.
The availability of insurance coverage for social media or cyber liability risk has yet to be challenged in Washington courts, but several jurisdictions across the country have found coverage for data breaches and other cyber liability risks. Several companies have successfully procured coverage in court rulings and through settlement under a variety of different policies. In many instances, coverage is available for both defense and indemnity costs.
When purchasing insurance for cyber risks or considering current coverage for a cyber liability, it is essential to consider all policies, as coverages may be written and offered in different modules and on varying policy forms. Some insurers sell specific media, technology or cyber liability policies, which offer varying degrees of coverage, depending on the form and the risk to be insured.
As social media evolve though, insurers may change forms and create different policies. Therefore, when purchasing or renewing a cyber liability policy, carefully review new exclusions and endorsements to ensure you are purchasing the coverage you intend.
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