What's the difference between Crime Insurance and Cyber Insurance?
Crime Insurance has been around for decades with a focus on protecting companies from employee and vendor theft, fraud and forgery.
By contrast, Cyber Insurance was created to protect companies from damages occurring from cybercrime. The first cyber policies covered such things as customer notification, credit monitoring and other related services, as well as third-party liability.
Today, the lines are blurred. In a highly connected business landscape, ransom, embezzlement, and many other types of loss now have a different criminal face. Some are covered under a crime policy; others are covered by cyber insurance. So how do you determine what constitutes a crime loss versus a cyber loss? Alliant Insurance Services offers this guidance:
- Is it a direct or indirect loss? One of the primary purposes of cyber insurance is to protect companies whose customers’ personal information has been compromised. In this case, you may be responsible or liable for damages incurred by those connected to you – an indirect loss. A crime policy, however, covers losses such as theft of your money or securities – a direct loss.
- Is it a tangible or intangible loss? Cyber insurance covers the loss of intangible property such as data files, proprietary formulas, sensitive financial information, and personal data of customers or employees – an intangible loss. Crime coverage comes into play when there’s a physical loss of securities, money, or merchandise – a tangible loss.
- Is it a third party or first party loss? Under a cyber policy, the initial loss is to another person, company or other entity – a third party loss. A crime policy, however, covers losses you incur – a first party loss.
While this guidance helps, these policies are more complicated in real life, especially as cybercrime and insurance protection both continue to evolve.
For example, cyber insurance policies not only include coverage to reimburse for expenses associated with a data breach. They now include coverage for:
- Private data breach
- Systems and data restoration
- Social engineering
- Cyber extortion
- Media coverage
Cyber insurance gets a lot of attention; however, crime insurance should not be overlooked. Though crime insurance covers the loss or theft of money, securities, or other property, it can include computer fraud insurance, which covers the loss of company assets transferred by use of a computer to an unauthorized person or place.
No matter your industry or company size, every company is at risk for cybercrime. Take the time to educate yourself, review your policies and confirm your coverage. Your LMC Account Executive is available to help.