Cyber liability insurance and technology errors and omissions insurance both cover data breaches at IT businesses. The type of coverage your business needs depends on whether a cyberattack could damage your company, your clients, or both.
There are two types of small business insurance policies that provide data breach protection: technology errors and omissions (E&O) and cyber liability insurance. The type of insurance that is the best fit for your company depends on who is likely to be impacted the most by a cyberattack – you or a customer.
Data breaches have affected hundreds of millions of customers across numerous industries. When this happens, the companies pay for finding the cause of the breach, notifying customers and regulators, and providing credit monitoring for their customers. The average cost of a data breach is several million dollars or more, according to the Ponemon Institute.
If you own a technology firm and you recommend or install hardware or software that enables a breach, you might face expensive litigation. Technology companies with a large client risk may have a greater need for technology E&O insurance. A business that faces more internal risks might consider cyber liability (or data breach) insurance, which mitigates a company’s own breach-related costs.
Technology errors and omissions and cyber liability insurance both address cyber risks, but from a different perspective.
Cyber liability insurance helps companies address the financial aftermath of a cyberattack or another type of data breach that occurs with data on the company's systems. It pays for the costs of:
These and related costs are known as first-party costs, since they affect the policyholder, unlike costs your customers must pay after you cause a breach (third-party costs). Cyber liability insurance also pays for customer claims resulting from the theft or breach of customer data from your network.
Technology E&O insurance protects a company that makes a mistake or forgets to do a critical task that hurts a client financially. These mistakes can range from recommending inappropriate technology to failing to meet project deadlines. When a client sues to recover losses, technology E&O insurance will pay for a firm’s legal expenses, including:
Cyber liability insurance covers the first-party costs of a data breach. However, the value of such a policy depends on how much customer data you store on your network. If that’s a significant part of your business, you’ll want to protect yourself against hackers or other incidents exposing your data.
If you don’t store much customer data, your first-party risk may be small. However, if the technology services you provide have a strong bearing on your clients’ network security, your third-party liability may be significant. In that case, you may have a strong need for technology E&O insurance.
Insureon partners with top-rated insurance companies to help small business owners compare quotes for technology E&O and cyber liability insurance policies. Start an online application to compare quotes and protect your business and clients. Our licensed agents can provide more information and guidance at any point in the process.