Frequently asked questions about cyber insurance

Cyber insurance, also known as cyber security insurance, helps small business owners deal with the expensive costs of data breaches and malicious hacking.

It helps you cover the costs of credit monitoring, legal fees, and fines, as well as notifying your customers, which is typically mandated by each state’s data breach notification laws.

First-party cyber liability insurance, also known as data breach insurance, covers the direct costs of a data breach or cyberattack.

This may include cyber ransom payments, business interruption costs, and breach response costs such as customer notification, credit monitoring services, and Payment Card Industry fines. This coverage is often used by companies that handle financial data, such as credit card information.

In addition, first-party cyber liability insurance sometimes includes media liability, which protects against software copyright infringements. This often needs to be added as an additional coverage.

Third-party coverage insures your business against the cost of a lawsuit, if a customer sues your company for failing to prevent a data breach or cyberattack at their business. It can help cover your legal fees, settlement costs, and court-ordered judgments.

This coverage is often used by technology businesses that help clients maintain their computer systems and are responsible for network security.

Third-party cyber liability coverage can be combined with an errors and omissions policy into what is known as technology errors and omissions insurance, or tech E&O.

It does, and that’s one of the reasons so many businesses buy this coverage. If a customer sues you over data loss or a cyberattack, your cyber liability insurance will cover you even if you’re not at fault.

You need cyber liability insurance before an incident happens. Cyber liability coverage is typically issued as a claims-made policy, which means a claim is only covered if the incident and lawsuit occur while the policy is active.

Our easy online application takes just a few minutes to complete. You can compare insurance quotes from top-rated U.S. carriers. If you need help with your decision, you can speak with one of our insurance agents about your business insurance needs.

Once you find the policy you need, you can begin coverage in less than 24 hours. We can email you a certificate of insurance, which is the proof-of-insurance you need to show when you sign certain contracts or apply for professional licenses.

Your cost of cyber liability insurance depends on several factors, such as your policy limits, how much sensitive data your company handles, any claims you’ve had in the past, and your exposure to potential data breaches and cyberattacks.

Among Insureon’s small business customers, the median cost of cyber liability insurance is $140 per month (or $1,675 per year). The median excludes high and low outliers, so it provides a better estimate of what your small business is likely to pay than the average cost.

Over a quarter of small business owners (27%) pay less than $1,000 per year for cyber liability insurance, and another 36% pay between $1,000 and $2,000 per year. These figures are sourced from an analysis of policies issued to Insureon customers.

Businesses that handle or protect large amounts of data will buy cyber liability coverage, especially if this data is Personally Identifiable Information (PII) such as credit card information, Social Security numbers, and medical records.

This includes:

Filing a cyber liability claim is easy, just contact your insurance provider directly. They will ask you for a description of the incident, information about your business, and your policy number. The agent will talk you through the filing process and answer your questions.

Your Insureon agent can guide you through all your policy options, increase your level of coverage, and tell you what kind of impact this will have on your premiums.

Canceling a policy before its expiration date means you’ll likely have to pay more for the same coverage in the future, as insurance companies typically charge higher premiums to businesses that cancel their coverage.

It could also leave you unprotected in case of a lawsuit. Cyber liability coverage is usually a claims-made policy, meaning it only covers claims for incidents that happen and lawsuits that are filed while a policy is active.

Cyber liability insures against the costs of dealing with a cyberattack or data breach at your business. This is known as first-party liability insurance because it directly impacts your business. It can often be added to your general liability insurance, a business owner’s policy, or a Tech E&O policy.

Technology E&O combines cyber liability and errors and omissions insurance. This coverage is for third-party liabilities, such as when a customer accuses you of negligence that led to a data breach on their own system.

Electronic data liability insures you against data loss when there’s physical damage to or loss of your tangible property, such as a computer or hard drive.

Cyber liability insurance covers you in case of cyberattacks and data breaches, where the damage is digital rather than physical.