The short answer is: yes.  General Liability (GL) policies do not cover the loss exposures covered by cyber insurance policies.

General Liability Insurance 

Before we dive in, it is important to understand what a GL policy covers:

General Liability insurance protects business owners from third party claims of injury, property damage, and negligence related to their business activities. The forms of negligence covered often include advertising related injury (defamation and copyright infringement, among other related matters) and product liability. In other words, GL policies cover some of the common lawsuits that may arise from everyday business activities such as renting property, working with clients, and interacting with customers.  

These coverages (3rd party property damage, 3rd party bodily injury, advertising and product liability) are a simple way to think about this type of insurance—of course, you should also review your policy for specific coverage information!.  

General Liability vs. Cyber Insurance 

The confusion associated with General Liability coverage for cyber incidents centers around the "3rd party property damage" coverage provided in GL policies. You might be asking yourself "Surely, if my company causes a client's data to be compromised, that data would be considered property, right?" Unfortunately, in the world of GL insurance, "property" only encompasses tangible property and not your digital assets. Nor do GL policies cover the 1st party costs you might incur to recover from a cyber incident (e.g., the costs to hire computer experts to investigate the cause or restore the damage, the costs to restore data in a ransomware attack, business interruption losses, among numerous other loss possibilities). 

For IT providers and consultants, GL policies do often include an endorsement titled, "Digital Data Protection Endorsement". Where this endorsement is present, the GL policy will cover the loss of data, but only for situations where 3rd party data is lost due to property damage.

In Conclusion...

General Liability policies do not provide adequate coverage for the cyber and technological risks faced by nearly every company. This is why cyber insurance exists. Cyber policies have been crafted  to provide coverage for the various loss exposures companies face (both 1st party, and liability to 3rd parties) that result from a cyber incident.

To learn more about what cyber insurance covers, click here.

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