How Cybersecurity Incidents Can Impact General Liability Claims

Many business owners may think of cybersecurity as an IT problem, but the financial fallout from a data breach or network attack can have widespread consequences for many facets of your business. Understanding cyber risks and how insurance may cover possible losses can help you make smarter decisions about protecting your business’s interests.

Why General Liability Insurance Typically Does Not Cover Cyber Incidents

General liability insurance covers third-party claims for bodily injury, property damage and personal and advertising injury, but most policies were not designed to respond to cyber incidents, and many include explicit exclusions for them. Even so, a cybersecurity incident can generate the kinds of claims that might appear to qualify:

• A data breach exposing customer information may prompt third-party negligence lawsuits.
• A compromised vendor system tied to your network could lead to claims from business partners.
• Malware spread to a client’s infrastructure may raise property damage arguments.
• Reputational harm from a breach could support personal and advertising injury claims.

In most cases, however, your general liability policy will not respond to these claims. Review your specific policy terms to understand what coverage applies.

Reviewing Your Coverage Before an Incident Occurs

The best time to evaluate your coverage is before something goes wrong. An independent agent can review your general liability insurance and help you augment your business’s coverage with a cyber liability insurance policy designed specifically to address data breaches and other cyber incidents. By working together, we can help identify any overlaps or coverage gaps in your business insurance.

Protect Your Business With the Right Coverage

Contact Toro Insurance P&C today to review your current coverage and make sure your business is financially protected on all fronts. We’re proud to serve businesses in Phoenix, AZ and beyond.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.