Tuesday, July 2, 2013

Net Sec and Pri Li

Say What?

Net Sec and Pri Li are two terms that you should be hearing from your Insurance Agent if your company uses the internet and has sensitive data stored on your network (and who doesn't?).

Network Security & Privacy Liability is an important coverage combination.  It protects your company against:

·       Damage to other companies’ networks resulting from transmission of viruses (and the like) from your network

·       Liability from the disclosure of confidential personal information either through a data breach or theft of records

·       Internal expenses to respond to a data breach, i.e. notification of affected parties, investigation of the cause & scope of the breach


In evaluating Privacy Liability coverage, one notable exclusion is misappropriation of trade secrets.  When data is exposed, the policy defines it as “non-public personal information,” i.e. social security numbers, financial information, driver’s license numbers, etc.  If your company has information on customer/partner trade secrets on its servers, and that information is exposed, the policy may not cover liability from that information. 

Very few companies offer coverage for misappropriation of trade secrets.  One carrier offers coverage for an unintentional misappropriation, but that can be tricky.

Read your policy carefully when you get it.

Another aspect of Privacy Liability is protection from Regulatory actions.  Several states (including VA) have privacy notification laws in place.  If a regulatory action is brought against your company for failure to respond or comply with these laws, then Regulatory coverage includes some protection for your defense or costs to comply with Regulatory actions.  Regulatory coverage is usually included as a sublimit. 
 
As you can see, getting the policy is only half the battle.  Make sure you are familiar with the different coverage conditions as those are the ones that could rise up and bite you in a claim situation.