Mondelez Security Incident

Insights Blogs Data Dive Issues to Consider When Evaluating Cyber Coverage in Light of the CCPA and Other State Privacy Laws Nov 4, 2019 Reading Time : 7 min By: Natasha G. Kohne Covering costs related to data breach response and recovery and data breach- and privacy-related enforcement actions and litigation presents challenges. Worldwide, as of April 2019, the average total cost of a data breach was $3.92 million. 1 The average total cost of a data breach in the United States was $8.19 million. 2 The costs of enforcement actions can be similarly significant in terms of monetary penalties and secondary costs. Without adequate coverage, these costs can have long-term effects on a business. Cyber policies are now a common part of most companies insurance portfolios. The policies generally cover five principal areas: (1) costs to manage and respond to a cyber-incident, (2) costs stemming from network interruption, (3) costs for security and privacy liability, (4) costs relating to extortion and (5) costs for media liability or reputational harm. Whether insurers cover all of these areas or all costs within different areas varies from policy to policy. Most policies offer first-party and third-party coverage. First-party coverage applies to losses that are directly sustained by the insured party, such as damage to a companys own electronic data files. Third-party coverage applies to claims by others against the insured company, such as claims by people who were injured by the insured companys actions (or inactions). With the increase in state privacy legislation, particularly the CCPA, many insurance companies are working with clients to also cover certain compliance costs arising out of a violation of a privacy-related legal obligation where no underlying cyber incident has occurred. Insurers and insureds alike are also working to understand how the CCPAs private right of action fits within existing third-party liability coverage and whether and how they may need...

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