What is Cyber Insurance? 

During the 2020-21 financial year, the Australian Cyber Security Centre (ACSC) observed self-reported losses from cybercrime in Australia totalling a staggering $33 billion. Most businesses rely on technology to some extent, which means they’re exposed to increasingly sophisticated cybercriminals. According to the ACSC, an average of 164 cybercrime reports are made by Australians every day – that's about one report every 10 minutes.  

Cyber Insurance covers the physical loss or damage to information, IT systems and networks. It can also cover loss of profits to be business, caused by the introduction of malware, extortion or hacking, as well as management of the incident itself. 

Why is Cyber Insurance important?

Businesses must have guards against hackers and other types of cyber breaches. What’s more, because of stricter data privacy laws, they’re increasingly required to ensure personal information is secure. A breach will be investigated and require costly actions, including contacting hundreds or thousands of customers. There’s also the potential for hefty fines and penalties.

It’s easier to buy an insurance cover that protects your main cyber-related risks of damage to your systems and recovery, rather than trying to find specialist consultants to rebuild systems and keep the business operating. Cyber Insurance policies also generally include significant support with managing the incident, which can be essential when faced with reputational damage or regulatory enforcement.

What does Cyber Insurance cover?

There is a wide range of Cyber Insurance available. While all policies cover liability to third parties for passing on viruses, some also cover damage to your own networks. 

Additional sections that we recommend considering include:

• incident response – specialists to identify the issue and repair
• lost income and additional costs related to the incident
• data recovery and restoration
• consumer notification costs and ongoing monitoring costs
• legal defence costs
• cyber extortion management and fees
• crisis and PR management of the incident
• management of communications with regulators. 

Managing cyber risks to your business

Cyber Insurance is a key part of your management of cyber incidents and attacks. Many resources are available to help minimise the likelihood of a successful attack, including the Australian Cyber Security Centre. 

The top 3 things that you can do easily are:

1. Update your devices to protect information.
2. Set up multi-factor authentication for logging on.
3. Back up your data real-time of at least daily.

Explore your insurance options today. Talk to your professional insurance and risk adviser and get the best cover for you and your risks.

Frequently Asked Questions

What is not covered by Cyber Insurance? 

Like any insurance, not everything is covered by your policy. Some common exclusions include:

• personal injury
• consumer redress funds, unless specifically covered
• loss of money or securities, unless specifically covered
• your intentional conduct or wrongful use of personal information 
• failure to take reasonable care in securing your IT systems

Is Cyber Insurance required in Australia? 

Cyber Insurance can help you to manage your business's financial risks. While it isn’t mandatory in Australia, it is expected that certain businesses have some level of cover in place – including critical industries, care, finances and utilities. Without insurance, you would be forced to pay out of your own pocket for repair, recovery, and remediation costs from a cyber incident or attack.
 

What are the main areas covered under Cyber Insurance?
 
Cyber Insurance typically helps you with expenses spent on five main areas: 

1. Third-party liability
2. Emergency response and business continuity assistance
3. Recovery of your data and IT systems
4. Business interruption due to interference to your systems
5. Loss to you from crime or fraud. 
    

Does Cyber Insurance cover data loss? 

Yes, Cyber Insurance covers your lost information and data, as well as any loss caused to your customers or suppliers if a virus is transferred. It also covers:

• notifying potentially affected customers of a data breach
• employing computer forensic experts to identify and restore data
• repairing damaged computer systems, both hardware and software, to enable the data and systems to operate.

What are the benefits of Cyber Insurance? 

Cyber insurance is a specialist insurance policy that provides cover against cyber incidents or attacks that aren’t covered by other insurance policies, such as professional indemnity, management liability, or business packs. This could potentially leave a gap in cover. A Cyber Insurance policy will pay for legal costs, crisis managers, and payment of credits and refunds to customers.

What is Liability Insurance? 

Liability Insurance is a general term that covers multiple types of insurance cover that help people and businesses protect themselves from potentially large legal defence costs and any damages awarded by a court. 

The main types are Public & Products Liability, Professional Indemnity, Management Liability, Statutory Liability & Product Recall. These also specialist liability insurance for the aviation, marine, Care and finance industries. 

Why is Liability Insurance important?

Some Liability Insurance is mandatory, which means the government requires you to have it in place to operate the business – like Professional Indemnity for architects or CTP Liability Insurance for registered cars and trucks. Other types are optional, with the scope and amount of insurance cover chosen by the business owner.

Anyone who deals with the public, sells, imports goods, drives a car or truck or operates a plane or boat should have Liability Insurance, which has two main cover sections:

1. Public Liability – injury to the public or damage to their property on the business premises or caused in a truck or boat accident.
2. Product Liability – once the item you sell or repair leaves your control (for example, a plumber installing a washing machine), if it damages or injures someone then you could be legally responsible.

Additional covers include:

• Professional Indemnity – if you provide advice or a service, such as an accountant, care worker or building consultant, you could be legally liable for any advice you provide, which results in external clients or customers being financially worse off.
• Management (D&O) Liability – covers the personal liability of directors, officers and senior managers for mistakes they make in running the business. This may result in a loss to the company, its shareholders, or bank or an investigation by ASIC, EPA or other government agencies.

What does Liability Insurance cover?

Cover depends on the type of Liability Insurance you’ve purchased, as well as your business and your industry:

1. Public Liability Insurance – covers people, businesses, events and contractors for legal defence costs if legal action is taken against you or the business, whether it’s a genuine claim or a try-on from a disgruntled customer. This insurance will also pay any damages awarded by a court if found responsible for causing personal injury or damage to property, as well as any resulting financial loss. While Public Liability cover can be mandatory, like plumbers in some states, it’s mostly optional and a decision for the business owner.
2. Product Liability Insurance – If you make, import, sell, distribute or repair products, you can be responsible for personal injury, property damage or resulting financial loss due to faults in the product, product advice about the use, or even customer misuse. You are unlikely to be able to depend on the original manufacturer, importer or retailer to protect you and pay for your legal costs. So, it’s a good idea to take out Product Liability Insurance as protection against potentially having to pay expensive legal defence costs and any damages awarded by a court.
3. Professional Indemnity Insurance – provides cover for professionals which is any person that has expertise and is usually part of a trade or professional group, such as builders, designers, architects, IT consultants, and allied health professionals, as well as doctors and lawyers. It covers legal defence costs and any damages awarded from an act, error or omission arising from professional services you and your business provide to customers and clients.
4. Management Liability Insurance – covers directors, officers’ and senior managers against actual or alleged acts, errors or omissions arising out of the operation or management of the company. The cover is for personal legal defence costs, as well as any damages awarded for a breach of work-related duties and responsibilities. The policy will also reimburse the company for any legal costs advanced to the director or officer.

As you can see, there’s a wide range of Liability Insurance, with cover tailored to each industry and type of business. The better advice you get, the more informed your decision to ensure the best protection for you, your directors and managers and the business.

We’ll be glad to talk with you to understand your needs and provide advice on the best way to manage your personal and business liabilities.

Frequently Asked Questions

What is an example of liability insurance? 

There are mandatory and optional liability insurance covers required by government bodies or professional organisations.

1. Mandatory or Statutory Liability Insurance policies include Professional Indemnity (also referred to as PII or E&O insurance), Motor Vehicle CTP, Workers' Compensation and Builders Warranty.
2. Optional Liability Insurance policies include Property Owners’ Liability under a home or property insurance package, Protection & Indemnity insurance for boats, Public Liability for shop or office owners, and Product Liability for importers, wholesalers and builders.

What is covered by liability insurance in Australia?  

Liability Insurance covers a person or a business against claims (whether real or invented) that the person has been injured, their property has been damaged, or they’ve suffered a financial loss. All policies provide legal costs to defend against threatened or actual litigation, and also pay for damages if you or the business are found to have been responsible.

What kind of liability insurance do I need? 

Some occupations, such as builders or tax agents, must have Liability Insurance in place before starting a business. Talk to your professional organisation or industry association about what insurance you need. Other Liability Insurances are optional – for example, a large food producer may look at buying Product Recall, whereas retailers and property owners would purchase Public Liability. Motor Vehicle CTP and Workers' Compensation are required if you own or operate vehicles or have employees.