Employment Practices Liability & Cyber Liability — Insurance Policies Not To Neglect

There are certain insurance policies, such as workers' compensation and general liability, that are ubiquitous and are purchased by nearly every operating company in every industry.

There are certain insurance policies, such as workers' compensation and general liability, that are ubiquitous and are purchased by nearly every operating company in every industry. While some companies will purchase additional insurance policies that are applicable to their operations and industry specific risk exposures, other companies elect to self-insure, declining to purchase certain insurance coverage they deem to be low risk exposures or not worth the investment in coverage.

Employment Practices Liability Insurance

As employment practices liability insurance started gaining prominence over a decade ago, with some companies understanding and appreciating the importance of the coverage, there were some that expressed hesitancy to purchase the coverage, struggling and failing to understand the need for it.

Fast forward to today and one would be hard-pressed to find a company operating without such coverage. The arrival of the #metoo movement and the attention it placed on workplace behavior ushered in a new era of understanding — appreciating the significance and need for such insurance coverage.

Cyber Liability Insurance

A similar evolutionary process (though not from a moral equivalency perspective) has been unfolding in the insurance industry with cyber liability insurance. As it emerged in the industry, there was significant hesitancy in exploring the coverage, let alone purchasing it. Initially, companies refused to acknowledge the importance of the coverage. Even as large cyber events took place, most businesses failed to realize that they were targets, incorrectly believing that only "brand name" companies were targets of the deleterious designs of cyber criminals.

Over time, it has become apparent that smaller and lesser name companies are actually greater targets of cyberattacks. Due to a lackadaisical approach and weaker attempts at cybersecurity, smaller companies are easier targets and ultimately more often the victims of cyberattacks. Given multiple sources of data supporting this notion and indicating that anywhere from 50% to two thirds of small businesses have suffered at least one cyberattack, along with greater education and awareness, it is now rare to encounter a company that is not, at the very least, interested in exploring the coverage, if they haven't already purchased it.

It is important to be aware of the key points for these two lines of coverage to better understand the potential exposures to risk and how to address it with insurance.

What Businesses Can Do Now

• Due to the variety of different forms and the amount of carriers competing in this space, multiple quotes should be obtained and compared in order to achieve best pricing and to better understand the coverages available.
• It would be prudent to review the coverage with an insurance broker or consultant that is well-versed in cyber liability coverage to ensure the right coverage is put in place.
• Because there are no standard forms, carriers are more flexible when negotiating terms and coverage, and unique exposures can be addressed without the typical roadblocks one would encounter when trying to negotiate terms with other insurance policies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.