What is Cyber-liability insurance

Ever heard of cyber-liability insurance? Is it something you need or is it just another way for insurance companies to make buck off of you like pet insurance, iPhone insurance, or immaculate conception insurance (yep, that's real
- http://dailynewsdig.com/5-crazy-insurance-covers-that-you-never-knew-existed/)? The answer is: maybe. To answer that, we have to do a quick refresher on what insurance is for. I promise, I'll be brief.

So, you probably already know that insurance exists to protect you from bad things happening. Right? Well, not quite. Insurance only protects you from some of the negative consequences of a bad thing. It doesn't keep you from driving your car into a pole - but it will pay to patch your car up afterwards. So, how do we decide which insurance to buy and which insurance to avoid. First we have to gauge our risk. To gauge risk, you have to figure out what the likelihood is of "the bad thing" happening, and what the consequences are if it happens.

Let's call the odds of trashing your iPhone moderate. The odds are higher for some clumsy people (like me), and lower for others. The cost of replacement is probably a few hundred bucks. So, if you have lots of cash lying around, you probably don't need the insurance - you can absorb the risk yourself. If you spent your life's savings to get the phone, and would have to save for 3 years to replace it - you might want to consider then insurance.

Now, on to cyber-liability insurance. Imagine all of the bad things that could happen to your computer systems, website, or data. Create in your head, visions of evil hackers dressed up like Linux ninjas (at least that's how I picture them) who have nothing in their lives more important than messing up your technology, stealing your customers' identities, and crashing your infrastructure. Imagine every server, router, switch, and fiber cable that involved in your internet connection, hosting, and server management as being teetering on the edge of total catastrophic failure. That's what what we're insuring ourselves against.

So, the final point is, how likely are you to be hacked, to lose data, to have a catastrophic failure and what is the cost. If that doesn't make you nervous at all, then you're either unaware, have nerves of steel, or have low risk. If lie awake at night in fear of those evil hackers and teetering servers, then you probably have a higher risk and might want to consider transferring some of it to an insurance company.

If you want some more information, there's an excellent article by Minda Zetlin over at Inc that's worth a read.
http://www.inc.com/minda-zetlin/6-reasons-you-should-have-cyber-liability-insurance.html