Cyber and privacy liability or data breach coverage can be compared to any new, innovative tech product that lands on retail store shelves these days. Initially, the gadget is costly and unequipped with many of the enhancements made to the later models. Then, as time progresses, it gets refined and affordable.

The same is true with specialty insurance. Today's cyber and privacy liability policy looks nothing like the models that rolled out in the 1990s and it costs a fraction of the price. 

A business owner in 2012 can purchase a full, robust policy form that encompasses third party, first party and media liability coverages for under $1,000. This was unfathomable just a couple of years ago. 

Read the sidebar “Seven Core Questions.”

Carriers want to diversify their portfolios from the typical P&C products. They also want to differentiate from the crowded pack, so they are making attractive offerings to consumers and agents. A product that was once a costly cross-sell with no perceived value is now very much in demand in today's technological world.

Related: Read the article “Corporate Identity Theft” by Susan Massmann.

Intense media coverage about security breaches has heightened the awareness of business owners who are curious about the cyber liability products. 

Just turn on the television, pick up a magazine or log onto the Internet to hear and read about the latest organization falling victim to a breach of customer information. Whether it is card processing giant Global Payments—which suffered a breach in the first quarter of 2012—or Epsilon, Sony or another trusted organization, these incidents prove that no company is immune to a breach of information security. 

Most businesses that store customer data have an exposure to privacy liability. Any company that uses computers or accesses networks has an exposure to cyber liability. If telecommunications-savvy AT&T or Internet mogul Google can experience a breach, chances are any business can. 

With media buzz surrounding these big-name breaches, it is time for agents and brokers to begin discussing the exposures clients face regarding information security. These coverages are no longer a luxury or an undervalued add-on, briefly mentioned after the general liability or property coverages have been addressed.

Cyber and privacy liability is now a necessity and should be a key component in each client's overall insurance portfolio. 

Related: Read the article “10 Tips When Considering Cyber Insurance ” by Rick Kam and Jeremy Henley.

All of these scenarios are real and are only a snapshot of the new age technological world of business. Business is conducted on the go and sensitive information is accessible at the click of a button. Exposures are everywhere.

When it comes to cyber perils and privacy liability, many people envision a devious hacker breaching a company network from half a world away. But think about these examples:

• The lawyer who has his car broken into and laptop, which contained all of his client's personal information, stolen
• The medical clinic assistant who lost a batch of patient medical files
• The rogue restaurant waiter who uses his personal skimmer to extract credit card data from his customers.

Privacy breaches can occur from unauthorized access, physical taking and the mysterious disappearance of personally identifiable information. Whether the breach is accidental or intentional, the end result can still be the same.

Unintentional or deliberate acts can all lead to third-party losses resulting from identity theft. However, third party is only a fraction of the value-added coverage provided in today's readily available policy forms. 

Today's enhanced forms include coverage for first-party extensions such as business interruption, cyber extortion and systems and data recovery. Computer forensic services are offered to determine how the breach occurred and what information may have been compromised.

Related: Read the article “Willis: Boards Must Be More Aware of Cyber Liability” by Mark E. Ruquet.

These policies also show real value in the notification costs provided to affected individuals, credit monitoring and freezes, as well as providing call center services should notified individuals wish to discuss the breach of their information. 

Contractual liability can be offered to cover the agreement between service providers and customers. Coverage also can extend to regulatory fines and penalties, payment card industry (PCI) fines, and wording tailored specifically to healthcare entities addressing HIPAA and HITECH. Additionally, multimedia coverage can be extended to an organization's online activity surrounding its website. 

These are just some of the enhancements available with today's new and improved cyber and privacy liability products. Agents and brokers should discuss with their clients how a breach impacts the day-to-day operations, reputation and finances of their business.

Like all technology-related gadgets, if you wait long enough the product improves and becomes more affordable. However, waiting too long could be catastrophic to your clients business if they are not properly insured when a data breach occurs.