This is something I’m hearing quite a lot at the moment as clients struggle to understand the overlapping elements of these various covers.
There are rafts of businesses out there including Solicitors, Accountants, Surveyors, consultancy businesses and High Tech or Digital Businesses, who have a requirement to insure the outcome of their advice or service in the form of Professional Indemnity Insurance (PII), which provides cover in the event of negligence or inadvertent error or omission. A large number of these businesses will also hold either client money or data, or possibly both, which adds another layer of risk for these companies.
As you might expect, the answer to this question is not straightforward. PII cover was designed to insure negligent advice or service to customers that resulted in a financial loss to the claimant rather than a physical loss or injury. The reality is that when this cover was designed computers hadn’t been invented, let alone online banking, smart phones or indeed cyber-crime. So whilst PII policies may respond, in some circumstances they are not designed with this intention and will certainly not respond as well as a specific Cyber or Crime Insurance policy.
Cyber Insurance is specifically created to respond to a data breach, including the loss of third party data, and will react to the consequences of such a loss including:
- PR Costs to manage the impact on your business
- Cost of writing to all data subjects, providing credit monitoring and the costs of answering the inevitable questions.
- Legal fees to defend claims or regulatory action
- First party cover for reinstating data on your network and the interruption to your business.
Crime Insurance is designed to compensate the business for a loss of money through fraudulent means, whether that be through Cybercrime or other types of fraud. This applies equally to client money as it does the loss of the business’ own funds.
As things stand the types of insurers who offer PII cover are not necessarily the same as those who offer Cyber and Crime covers. That said there are some who will offer a combined insurance to cover all three areas and where possible this is an attractive option. If cover is purchased separately there is some potential for there to be gaps in cover or overlaps where claims could be picked up under two policies at the same time; this can cause confusion and difficulty.
If a combined policy isn’t available it can still be beneficial to have all three covers with the same insurer, so that there is no argument over who will be reacting to a claim when deadlines are tight and you want to get on with it.
So to properly protect your business you need to “Be ProAktive” and consider carefully how these three covers dovetail and which ones are most appropriate for the risks you face.