Network security and privacy liability

Network security and privacy liability cover responds to the financial consequences of claims brought against the insured by third parties who believe they were harmed by a security incident. It combines two triggers. A security failure, when the insured's systems transmitted malware, served as a relay for an attack or prevented a customer from accessing its own data. And a privacy breach, when personal or confidential data held by the insured was disclosed, lost or processed in violation of regulations. The cover pays defense costs, either on top of or within the limit depending on wording, damages, settlements, and sometimes representation costs before a supervisory authority. It is generally written on a claims-made basis, which makes it a long-tail cover: an incident in one year turns into class actions several years later. Underwriting focuses on the volume and sensitivity of data held and on the jurisdiction of the people concerned, since class action risk is on an entirely different scale in the United States.