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Cyber liability insurance for consultants

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Cyber liability insurance

Cyber liability insurance, also called cyber security insurance, protects small businesses from the high costs of a data breach or malicious software attack. It covers expenses such as customer notification, credit monitoring, legal fees, and fines.

Cyber liability insurance covers data breaches

Cyber liability insurance safeguards your consulting business when sensitive data is stolen or compromised. If a hacker steals Social Security numbers, credit card numbers, or other personal information, you could be held liable. Cyber liability insurance can cover expenses from a client lawsuit and other costs related to the breach.

After a data breach or cyberattack, this policy can help pay for:

  • Customer notification expenses
  • Fraud monitoring services for affected clients
  • Legal costs from a client’s lawsuit

What coverage does cyber liability insurance provide for consultants?

There are two kinds of cyber liability insurance: first party and third party.

First-party cyber liability insurance

First-party cyber liability insurance covers data breaches at your own business. For example, a hacker could steal clients’ Social Security numbers from an HR consultant’s database. First-party cyber liability can cover expenses related to:

  • Notifying clients or customers about the breach
  • Credit monitoring services for affected clients
  • Cyber extortion demands
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Third-party cyber liability insurance

When a client suffers a data breach or cyberattack, you could face a lawsuit if they believe you were negligent in preventing it. For example, a marketing consultant could recommend insecure software to a client who later suffers a breach and sues their business.

Third-party cyber liability insurance protects your business from expenses related to a client’s lawsuit, such as:

  • Attorney’s fees
  • Court costs
  • Settlements or judgments

IT consultants and other consultants who work in the technology industry can sometimes bundle third-party cyber liability insurance with professional liability insurance (also called errors and omissions insurance or E&O). Both policies protect against accusations of negligence. The package is called technology errors and omissions insurance, or tech E&O.

Other important policies for consulting firms

Cyber liability insurance provides crucial protection for companies that handle sensitive data, but it doesn't cover bodily injuries, property damage, and other common risks. Other recommended policies for consultants include:

General liability insurance: This policy can pay for expenses related to common accidents, including third-party injuries, client property damage, and advertising injuries.

Professional liability insurance: Also called errors and omissions insurance (E&O), this policy covers legal costs related to business mistakes or decisions that resulted in revenue loss for a client.

Workers' compensation insurance: Workers' comp covers medical costs if a consultant suffers a work-related injury. It can also pay part of the wages lost while the employee recovers.

Business owner’s policy: A BOP bundles general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.

Fidelity bonds: A fidelity bond protects against dishonest employees by compensating clients who accuse an employee of theft. Your clients might require this coverage.

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Why do cyber liability claims cost so much?
There has never been a greater risk of cyberattacks against small businesses, and the costs have never been higher. Learn why cyber claims are so expensive, and how cyber liability insurance can help protect your business.

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Are you ready to protect your consulting firm with cyber liability insurance or another policy? Complete Insureon’s easy online application today to compare quotes from top U.S. insurers. Once you find a policy that fits your needs, coverage can start in less than 24 hours.

Updated: August 23, 2022
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