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Cyberextortion Coverage

Cyberextortion Coverage

Definition

An insuring agreement contained within some policies written to cover claims associated with data breaches. Such policies are most often termed "cyber and privacy insurance," "information security and privacy insurance," and "cybersecurity insurance."

This insuring agreement covers the costs associated with a cyberextortion event (e.g., an insured receives an email stating that the extortionist will introduce a virus into the insured company's website unless the company pays a $10 million ransom). The costs covered by this insuring agreement include (1) monies paid to meet extortion demands, (2) the cost of hiring computer security experts to prevent future extortion attempts, and (3) the expenses charged by professionals to deal/negotiate with cyberextortionists.

A few insurers do not offer cyberextortion coverage (also known as "e-commerce extortion coverage") because similar protection is available under kidnap and ransom insurance policies.

Similar to other cyber and privacy insurance policies, cyberextortion coverage is subject to an annual aggregate limit and an annual aggregate deductible.

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