Cyber insurance is a special insurance policy that covers your business’ losses and liability for intrusions into your business’s computers, computer networks, software, payment processing, and other information technology (cyber events). Cyber events that may be covered by cyber insurance include data breaches, malware, ransomware, viruses, spyware, wire transfer fraud, phishing, denial-of-service (DoS) attacks, Trojans, adware, botnets, man-in-the-middle attacks, credit card web skimming, and others.

In addition to breaching a business’s own valuable information and processes, a data breach may target a business’s sensitive customer information, such as credit card numbers, account numbers, telephone numbers, mailing addresses, passwords, driver’s license numbers, Social Security numbers, health records, and other personally identifiable information (PII).

In New Jersey, cyber insurance is designed to mitigate the risks associated with electronic business operations by providing coverage for various cyber events. This type of insurance typically covers the financial losses a business may suffer due to incidents like data breaches, malware, ransomware, and other cyber threats. It also extends to liabilities arising from the exposure of sensitive customer information, including PII such as credit card details, social security numbers, and health records. While there is no specific state statute in New Jersey that mandates businesses to carry cyber insurance, the state does have laws that require businesses to notify individuals of security breaches involving personal information. Additionally, New Jersey businesses are subject to federal regulations like the Health Insurance Portability and Accountability Act (HIPAA) for health records and the Gramm-Leach-Bliley Act (GLBA) for financial information, which may influence the need for cyber insurance to cover potential liabilities and regulatory penalties. Companies should consult with an attorney to understand the specific coverages and exclusions of cyber insurance policies and to ensure compliance with applicable state and federal laws.