Cyber Liability Insurance: Data Breach & Cyber Risk Coverage

Many businesses in the U.S. today aren't adequately prepared to protect themselves against data breaches and other cyber threats. Since cyber risks are always evolving, it’s important to ensure that your business gets equipped with the right coverage to protect its operations, revenue, and more.

The best way to achieve this is to work with an experienced independent insurance agent. They’ll be with you every step of the way while selecting the right policy for your business and get you set up with cyber liability coverage that considers all your business’s specific risk areas.

What Is Cyber Liability Insurance?

No matter where you’re based, cyber liability insurance is essentially a contract between a business or individual and an insurance company in which the insurer agrees to cover losses from liabilities and other costs related to various cyberattacks. Cyber liability insurance has begun to be offered with standard business insurance policies due to the growing importance and relevance of this coverage. Cyber liability insurance is also often referred to as cyber risk insurance, cyber insurance coverage, or business cyber insurance.

Though you may not think your business is extremely technical, with just an internet connection, you’re vulnerable to attacks by cybercriminals. Your business could suffer a phishing attack, data breach, or other common cyber threats.

Unfortunately, many business owners have had to learn the hard way how crucial it is to have coverage in today's digital business environment. It’s best to be proactive about protecting your business, which means getting set up with a cyber liability policy ASAP. An independent insurance agent can help your business get the protection it needs.

What Does Cyber Liability Insurance Cover?

Cyber liability insurance protects your business against paying out of pocket for costs related to data breaches or other cyberattacks. First-party coverage, which covers direct losses, can pay for costs that stem from the following:

Third-party coverage, which applies to claims made by others, can cover the following expenses:

• Lawsuits from data breaches
• Privacy violations
• Regulatory fines and penalties

The coverage in a cyber liability insurance policy varies greatly depending on which insurer you get coverage from, since these policies aren’t standard across the board. This type of coverage is relatively new, and insurers have started offering cyber liability insurance within the last couple of decades.

Cyber liability insurance protects businesses that store sensitive information or data electronically, conduct any type of transaction online, and are involved in various other scenarios involving computers. Though your policy may vary slightly, a handful of core coverages are offered by many cyber liability insurance policies. There are also a variety of coverage limits and deductible amounts.

Who Needs Cyber Liability Insurance?

Most businesses today need cyber liability coverage. Some examples include:

• Small businesses that store customer data
• Healthcare providers (due to HIPAA risks)
• E-commerce and retail businesses
• Financial institutions
• Professional service firms (e.g., lawyers and  accountants)

Cyber attack insurance policies are designed to protect your business against lawsuits stemming from cybercrimes, including breaches of confidentiality involving customer information, loss of data, electronic theft, loss of income due to temporary suspension of business operations, and other related losses. 

This coverage is becoming more essential as time goes on due to growing cybercrime threats, such as data breaches, phishing, and ransomware. There's also an increased risk of legal and financial consequences from these cyberattacks. Further, having the right coverage can aid your business in managing its reputation and maintaining customer trust.

Whether your business needs data breach insurance or cybercrime coverage depends on what your business does and what types of data you store electronically. Do you keep medical records, personal information, credit card numbers, or any other data that could damage your customers personally or financially if it got into the wrong hands? If so, you need small business cyber liability coverage. 

Cyber liability insurance may provide several different types of coverage, such as the following:

Because cyber liability insurance policies aren't standard, not everything listed above will be included in all policies. There may be differences in the coverages you see in different cyber liability insurance policies, depending on the insurance carrier.

What’s Not Covered by Cyber Liability Insurance?

Cyber liability insurance won't cover intentional or fraudulent acts against the public, a loss of future profits, physical property damage, or pre-existing security vulnerabilities in your business. Make sure to carefully review your cyber liability insurance policy, preferably with an independent insurance agent, to see which exclusions apply to you. Since cyber liability insurance is so customizable, two policies may not have exactly the same list of exclusions. 

Here are some common cyber liability exclusions:

• Bodily injury or property damage claims: Cyber liability insurance won’t protect against claims of bodily injury or property damage. That’s where a general liability insurance policy comes in.
• Loss of property: Losing a piece of property, like a phone or computer, is generally covered by commercial property insurance, not a cyber liability policy.
• Criminal activity: Typically, a cyber liability policy won’t insure against fraud, robbery, employee theft, or other crimes. Commercial crime insurance offers this coverage separately.
• Social engineering: Cybercriminals sometimes target their victims through social engineering or tricking people into transferring company funds to their accounts. Not all cyber liability policies cover social engineering. This additional coverage may come with a lower coverage limit, or it might be an optional add-on.

Often, when you purchase a cyber liability policy, you agree to maintain appropriate security measures in order to prevent a cyber incident from happening in the first place. If you fail to maintain these security measures, future claims might get denied. 

If an employee accidentally clicks on a phony link that causes malware to corrupt the company’s computer systems, the insurance carrier could deny coverage for failure to use preventive measures if the company didn’t have anti-malware software. Your independent insurance agent can review your company's cyber liability policy with you to see if this clause is listed. 

How Much Does Cyber Liability Insurance Cost?

Small businesses pay an average of $145 per month for cyber liability insurance, or about $1,740 annually. But just like any other type of insurance, the cost of your policy will depend on a number of different factors, including the size of your business, its industry, and its annual gross revenue. However, the smaller and less risky your business is to insure, the lower the cost of your cyber insurance premiums will be. 

Some factors that can impact the cost of cyber liability insurance for a small business are:

• Business size
• Location
• Industry
• Annual gross revenue
• Amount of sensitive data stored
• Existing cybersecurity protocols
• Claims history

Your independent insurance agent can give you more specific pricing information for cyber liability policies that work for you.

The Best Cyber Liability Insurance Companies

Cyber liability insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. Your agent can also help you find the right policy by assessing your business's cyber risks, comparing policy limits and deductibles, and helping you understand coverage exclusions.

While many insurance companies could create a cyber liability insurance policy for you, finding coverage could also depend on the area you live in. 

The best insurance companies for cyber liability insurance

 

Top Cyber Liability Insurance Companies	Overall Carrier Star Rating
Travelers	5 Stars
Liberty Mutual	5 Stars
Hiscox	4 Stars
AIG	3 Stars

Best Business Practices for Cybersecurity

Whether your business is insured or not, there are still important safety measures it can take to increase its cybersecurity, such as the following:

• Implementing strong firewalls
• Using data encryption
• Training employees to avoid phishing attacks
• Regularly updating software and patches
• Forming an incident response plan

If your business is proactive in its cyber risk management, it's much less likely to need to rely on its cyber liability insurance. Taking measures in cyber liability prevention can help ensure your business avoids costly disasters such as data breaches that expose customer data and more.

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Finding Discounts and Savings on Cyber Liability Insurance

Although the cost of cyber liability insurance can vary significantly, and certain policies are more expensive than others, many insurance companies offer a handful of competitive discounts and other ways to save money on coverage. An independent insurance agent is experienced in finding money-saving hacks for cyber liability insurance customers.

Here are a few examples of common discounts offered on cyber liability insurance:

How Much Cyber Liability Coverage Do I Need?

To answer this question, you'll have to analyze your unique business and its operations and risk levels. An independent insurance agent can help you evaluate the amount of risk your company faces for incidents like data breaches. From there, the two of you can work together to determine an appropriate amount of coverage for your business's specific needs.

The Benefits of an Independent Insurance Agent for Cyber Liability & Data Breach Insurance Questions

To protect your business from cyber attacks and get cyber liability insurance quotes, work with an independent insurance agent. These agents have access to multiple insurance companies, so they're free to shop and compare cyber liability insurance plans for you to find the best deal. And down the road, your agent can help you file claims if the time comes.

FAQs About Cyber Liability Insurance