Inside a Cyber Liability Policy: Real-World Example Explained

The Expert Podcast

🔍 Episode Highlights:

• Example used: A real-world cyber liability policy written by Philadelphia Indemnity (not affiliated, used purely for educational purposes).
• Importance of reviewing any insurance policy you hold—business liability, professional liability, errors & omissions, etc.
• Tips on identifying coverage gaps and unnecessary coverage to reduce insurance costs.
• Explanation of digital asset protection:
  • Coverage for loss due to damage, corruption, theft, misuse, etc.
  • Definition of digital assets: hard drives, data, records, research, and computers.
• Time-sensitive reporting requirements (e.g., within 60 days post-policy expiration).
• Business interruption coverage:
  • Covers loss of income, office space rental, and computer replacement costs.
• Cyber extortion/ransomware coverage:
  • Reimbursement for extortion expenses if guidelines are followed.
  • Requires consultation with insurer and law enforcement.
• Security event coverage:
  • Reimbursement for compliance with notification laws.
  • Mitigation of harm to brand and media management costs.
• Network security liability:
  • Covers damage to others due to your network breach.
• Employee privacy liability:
  • Covers breaches of employee personal information.
• Cyber terrorism income loss (with some exclusions).
• Claims expenses:
  • Legal defense, attorney fees, and appeal bonds.
• Covered damages include:
  • Future profits, client refunds, and offset of fees (with exceptions).
• Media liability definitions:
  • Libel, slander, invasion of privacy, and plagiarism—partial coverage.
• Key exclusions:
  • Utility failures outside your control (e.g., power surges).
  • Governmental actions, natural disasters (unless separately covered).
  • Lack of security compliance based on your proposal agreement with the insurer.
  • Known vulnerabilities prior to coverage start.
  • Previously reported losses to other insurers.
  • Acts of terrorism, environmental disasters, ordinary wear and tear.
  • Fraudulent, dishonest, or criminal acts by you or employees.
  • Unfulfilled contract guarantees or missing bonds.
• Emphasis on following insurer recommendations:
  • Reduces risk of uncovered losses.
  • Builds trust with insurers, improving renewal prospects.
• Importance of maintaining clean loss runs:
  • Keeps your premiums low.
  • Makes it easier to get approved for future cyber insurance.
• Historical context: Fire insurance in the 1800s-1900s required inspections—expect similar developments in cyber insurance.

✅ Takeaway:
Even a good cyber liability policy has limitations. Knowing what's covered, what's not, and how to stay compliant with insurer guidelines is your best defense against financial disaster from cyber threats.