United States: Employment Practices Liability and Cyber Liability – Insurance Policies You Shouldn’t Ignore
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Certain insurance policies, such as workers’ compensation and general liability, are ubiquitous and are purchased by almost every operating company in every industry.
Certain insurance policies, such as workers’ compensation and general liability, are ubiquitous and are purchased by almost every operating company in every industry. While some companies will purchase additional insurance policies that apply to their industry-specific operations and risk exposures, other companies choose to self-insure, refusing to purchase certain coverages from insurance they deem to be low risk or not worth the investment in coverage.
Professional liability insurance
While Employment Practices Liability Insurance began to gain prominence more than a decade ago, with some companies understanding and appreciating the importance of the cover, some have expressed hesitation in purchasing the cover, struggling and not understanding the need for it.
Fast forward to today and it would be hard to find a company operating without such coverage. The arrival of the #metoo movement and the attention it gave to workplace behavior ushered in a new era of understanding – appreciating the importance and necessity of such insurance coverage.
Cyber liability insurance
A similar evolutionary process (but not from a moral equivalence perspective) has taken place in the insurance industry with cyber liability insurance. As it emerged in the industry, there was significant reluctance to explore coverage, let alone purchase it. Initially, companies refused to recognize the importance of hedging. Even when major cyber events took place, most companies did not realize they were targets, mistakenly believing that only “branded” companies were the target of cybercriminals’ deleterious designs.
Over time, it has become apparent that smaller, lesser-known companies are in fact biggest targets of cyberattacks. Due to a lackadaisical approach and weaker cybersecurity attempts, small businesses are easier targets and ultimately more often the victims of cyberattacks. Given the multiple sources of data supporting this notion and indicating that anywhere 50% to two-thirds of small businesses have experienced at least one cyberattack, along with greater education and awareness, it’s now rare to come across a business that isn’t, at the very least, interested in exploring coverage, if not has not already purchased.
It is important to know the key points of these two lines of coverage to better understand potential risk exposures and how to deal with them with insurance.
Responsibility for Employment Practices
Some of the standard covers include:
Some enhanced coverages include:
Coverages can vary widely from carrier to carrier, but here are some of the coverages that may be granted:
Some enhanced coverages may include:
What businesses can do now
- Due to the variety of different forms and the number of carriers competing in this space, multiple quotes should be obtained and compared in order to get the best prices and better understand the coverages available.
- It would be prudent to review coverage with an insurance broker or consultant familiar with cyber liability coverage to ensure the correct coverage is in place.
- Because there are no standard forms, insurers are more flexible when negotiating terms and coverage, and single exposures can be handled without the typical hurdles one would encounter when negotiating conditions with other insurance policies.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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