DEFINITION of Crisis Management Coverage
Crisis management coverage is insurance coverage designed to help a business limit the negative impact of events on the business’ reputation. It is an insurance agreement usually made as part of technology errors and omissions and Internet/online property and liability insurance policies. Previously concerned with reputation management, crisis management coverage is increasingly used to cover expenses incurred to restore confidence in the security of the insured's computer system in the event of a cybersecurity or data breach. It also covers reputational threats such as product contamination or recall, terrorism and political violence, natural disasters, workplace violence, and adverse media exposure. Larger corporations are the most frequent buyers of crisis management coverage, but any business whose profitability is closely linked to its reputation is a potential customer.
BREAKING DOWN Crisis Management Coverage
As business has globalized and embraced digital transformation, so too have its threats. Global exposure to cybersecurity breaches, terrorism, political risk, travel risk, kidnap and ransom, product contamination, supply chain and product distribution disruption, and adverse media coverage has amplified previous reputational threats to an unprecedented scale. Crisis management coverage can extend from local PR incidents such as the drunk driving arrest of a prominent board member to international threats such as massive breaches of customer data or viral computer network invasions. Covered crisis management services can include threat assessment, impact analysis, and crisis management and response.
Insurance policies offering crisis management coverage may narrowly define the types of events they cover. Types of covered events may include workplace violence, assault, firearm use, food contamination, and workplace accidents. Events may also include credit card breaches or the hacking of a company’s computer network by an outside party. The coverage may be triggered by news media coverage of the event, whether in regional forums or national forums. Coverage will typically apply for a set period of time, such as 60 days, after a crisis event occurs, and be subject to an aggregate limit.
Policy coverage may include paying for various types of consultants, such as communications professionals, to assist the policyholder in identifying and executing a strategy to limit further impact of the event in the media. For example, the business may need to employ a public relations professional. The policy may provide loss of business income for a set period of time as well. In some cases, policies may cover post-event issues, such as funeral arrangements or counseling for individuals who witnessed or were involved in the event.