Cyber-attacks are a real threat to most businesses, regardless of the size of the business. In addition, many businesses think- “I don’t keep my customer’s personal data, so I’m not at risk of a cyber attack.” It is important to know that this isn’t completely true. If you do collect any personal information, for any reason, including employee data or prospect information, or more, you may be at risk. Also, many assume that because they are using a third-party software product that they aren’t responsible if that personal information is stolen. This also isn’t true. Anytime you collect any type of personal information, you could be putting yourself at risk.
Cyber liability insurance is going to be a vital part of any business owners’ coverage portfolio, especially if you use a computer to collect or store any kind of client information. The purpose of this policy is to cover any losses that may occur due to data breaches or other cyber losses. Data breach insurance can help cover your costs to notify impacted clients and employees, provide identity theft protection services, and produce a public relations campaign. Some of these steps are required such as requiring the notification of individuals if their personally identifiable information was a part of a security breach. This notification process can be expensive. These policies have a range of optional coverages that we are happy to discuss with you, making sure you find just the right policy for your specific situation and needs.
Cyber Liability Insurance – Frequently Asked Questions
- What is cyber liability insurance, and what does it cover?
Cyber liability insurance protects your business from the financial consequences of data breaches, cyberattacks, and other technology-related risks. Coverage typically includes response costs, legal fees, regulatory fines, data restoration, and business interruption losses. - Who needs cyber insurance?
Any business that stores sensitive customer information—such as names, addresses, payment details, health records, or login credentials—or relies on technology to operate should consider cyber coverage. This includes everything from medical offices and retailers to contractors and consultants. - What types of incidents are covered?
Policies commonly cover:
- Data breaches (accidental or malicious)
- Ransomware attacks
- Business email compromise (BEC)
- Cyber extortion
- Denial-of-service (DoS) attacks
- Social engineering and phishing
- Data restoration and forensic investigations
- Is cyber insurance included in a general liability or business owner’s policy (BOP)?
Usually not. General liability and BOPs may offer limited cyber endorsements, but true protection comes from a standalone cyber liability policy or a well-endorsed technology coverage form. - What is first-party vs. third-party cyber coverage?
- First-party: Covers losses your business directly suffers (e.g., ransomware, recovery costs, business interruption).
- Third-party: Covers liability from lawsuits or claims by customers, clients, or vendors affected by a breach.
- What’s typically excluded from cyber policies?
Exclusions may include:
- Prior known incidents
- Bodily injury or property damage
- Intentional or dishonest acts
- Infrastructure failures outside your control (like internet outages)
- Poorly maintained or outdated systems (if not disclosed)
- How much does cyber liability insurance cost?
Premiums vary based on your industry, size, data sensitivity, security practices, and desired limits. Small businesses often pay between $750 and $2,500 annually for a solid standalone policy. - What’s a retroactive date, and why does it matter?
The retroactive date defines how far back coverage applies. Claims must arise from events after this date, so the earlier it is, the broader your protection. - Does cyber insurance help with regulatory fines or investigations (like HIPAA or GDPR)?
Yes. Most policies include coverage for regulatory defense, compliance investigations, and many types of fines and penalties, though some exclusions or caps may apply based on local laws. - How can I reduce my cyber insurance premium?
- Use multi-factor authentication (MFA)
- Back up data securely and regularly
- Train employees on phishing and cyber hygiene
- Maintain antivirus, firewalls, and patch management
- Complete a security risk assessment and implement controls
