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Why do cybersecurity companies and consultants need insurance?
Your clients trust you to keep their tech systems safe, but just one mistake could result in a costly lawsuit. Protect your cybersecurity company with insurance policies that cover common liabilities, including allegations of negligence, medical expenses, and repair costs for property damage.
Find the right coverage
Insureon helps cybersecurity consultants find insurance quotes that match their unique risks.
Get free expert advice and peace of mind knowing you have the right property and liability coverage for your cybersecurity company.
What types of insurance do cybersecurity consulting companies need?
State laws and client contracts may require you to have insurance coverage. These policies cover the most common risks faced by cybersecurity companies and consultants.
Technology errors and omissions insurance
Tech E&O, also called tech professional liability insurance, is crucial for cybersecurity services. It covers lawsuits related to work performance, such as your advice caused financial harm.
BEST FOR
- Failure to deliver promised services
- Accusations of negligence
- Work errors and oversights
Cyber insurance
If a client suffers a data breach or cyberattack, a cyber insurance policy protects cybersecurity companies from a lawsuit by helping to pay for legal expenses and associated costs.
BEST FOR
- Data breach legal costs
- Client notification expenses
- Fraud monitoring costs
General liability insurance
This policy covers third-party risks every cybersecurity consultant faces, such as accidental damage to a client's laptop. Bundle it with property insurance for savings in a business owner’s policy.
BEST FOR
- Client bodily injuries
- Damaged client property
- Slander and other personal injuries
Fidelity bonds
This bond, also called an employee dishonesty bond, compensates clients if an employee at your cybersecurity startup steals from them. It's often required for client contracts.
BEST FOR
- Employee theft or fraud
- Unlawful data access by an employee
- Illegal fund transfer by an employee
Workers’ compensation insurance
Most states require workers' comp for cybersecurity companies that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Lawsuits from workplace injuries
Commercial auto insurance
This policy covers the cost of an accident involving a vehicle owned by your cybersecurity company. Most states require this coverage for business-owned vehicles.
BEST FOR
- Car accidents
- Vandalism and theft
- Weather damage
Looking for different coverage? See more policies.
How much does insurance cost for cybersecurity companies?
Cybersecurity professionals who buy policies through Insureon pay an average of $126 per month for E&O insurance, $130 per month for cyber insurance, and $33 per month for general liability insurance.
A cybersecurity company with only a few employees will pay less for insurance than a larger business.
Factors that affect cybersecurity insurance premiums during underwriting include:
- Cybersecurity / tech services offered, such as penetration testing or network security
- Business property and equipment
- Business size and annual revenue
- Types of insurance policies purchased
- Policy limits and deductibles
- Number of employees
- Claims history
How to start a career as a cybersecurity consultant
View video transcript.
[video: an animated header displays the Insureon logo. Underneath it, a subheading displays the text: "How to become a cybersecurity consultant"]
MALE VOICEOVER: If you've ever wondered how to become a cybersecurity consultant, you're not alone.
With cyberattacks becoming more common and businesses needing help protecting sensitive data, cybersecurity consulting has become one of the fastest-growing career paths in tech.
[video: an illustrated header displays the text: "Cybersecurity is a growing career path."]
So, what does a cybersecurity consultant actually do?
Cybersecurity consultants help organizations identify security risks, strengthen their defenses, and develop strategies to prevent cyberattacks.
They might also assess vulnerabilities, recommend security controls, create incident response plans, or help businesses meet compliance requirements.
[video: an illustrated header displays the text: "Cybersecurity consultants help businesses:"]
[video: Under above header, three bullet points display the text: "Identify security risks"; "Strengthen cyber defenses"; "Prevent data breaches"]
The first step to becoming a cybersecurity consultant is to build a strong foundation in information technology or IT.
Many professionals start with IT support, network administration, systems administration, or related technical roles. Understanding how networks, operating systems, and cloud environments work is essential before moving into cybersecurity.
[video: an illustrated header displays the text: "Most professionals start with IT fundamentals:"]
[video: Under above header, three bullet points display the text: "Network operations"; "Operating systems"; "Cloud computing"]
Next, develop cybersecurity-specific skills. Focus on areas like risk assessment, threat detection, vulnerability management, identity and access management, and security monitoring.
You'll also want to understand common cybersecurity controls that businesses use to reduce risk, such as multi-factor authentication, endpoint protection, employee security awareness training, regular software updates, and data backups.
[video: an illustrated header displays the text: "Understand essential security controls:"]
[video: Under above header, four bullet points display the text: "MFA"; "Endpoint protection"; "Employee training"; "Data backups"]
Certifications can also help you stand out. Entry-level professionals often pursue Security+, while more experienced consultants may earn certifications like CISSP, CISM, or Certified Ethical Hacker. These credentials demonstrate expertise and can increase your credibility with clients and employers.
[video: an illustrated header displays the text: "Popular cybersecurity certifications:"]
[video: Under above header, four bullet points display the text: "Security+"; "CISSP"; "CISM"; "Certified Ethical Hacker"]
As you gain experience, consider specializing in a particular area. Some cybersecurity consultants focus on cloud security, compliance, penetration testing, incident response, or cyber risk management. Specialization can help you differentiate yourself in a competitive market.
[video: an illustrated header displays the text: "Specialization areas:"]
[video: Under above header, five bullet points display the text: "Cloud security"; "Compliance"; "Penetration testing"; "Incident response"; "Cyber risk management"]
If your goal is to start your own cybersecurity consulting business, don't overlook the business side of your practice. Consultants often handle sensitive client information and provide recommendations that businesses rely on.
If a client claims your advice led to a financial loss or security incident, errors and omissions insurance, or E&O, can help cover legal expenses and related costs.
[video: an illustrated header displays the text: "E&O covers:"]
[video: Under above header, three bullet points display the text: "Oversights and mistakes"; "Failure to deliver promised IT services"; "Breach of contract"]
Cyber insurance is also worth considering. It can help protect your business from expenses related to cyberattacks, data breaches, ransomware incidents, and other cyber events that could impact your operations.
[video: an illustrated header displays the text: "Cyber insurance covers:"]
[video: Under above header, three bullet points display the text: "Cyberattacks"; "Data breaches"; "Security-related claims"]
Many cybersecurity consultants can get both types of coverage through a technology errors and omissions policy, also called tech E&O, which bundles errors and omissions and cyber insurance coverage together.
Also referred to as technology professional liability insurance, this policy can be more convenient and cost-effective than purchasing separate policies while providing coverage protection tailored to cybersecurity professionals.
[video: an illustrated header displays the text: "Cyber insurance covers:"]
The demand for cybersecurity consultants continues to grow as businesses of all sizes face evolving cyber threats.
By combining technical expertise, practical experience, industry certifications, and strong communication skills, you can build a successful and rewarding career helping organizations stay secure.
At Insureon, you can compare quotes from top-rated insurance carriers in minutes and find coverage designed specifically for cybersecurity consultants and other technology professionals.
[video: an illustrated header displays the text: "Insureon is the #1 digital agency for small business insurance."]
Tap the link to get small business insurance you can count on.
[video: an animated header displays the Insureon logo]
How do I get insurance for a cybersecurity services company?
It's easy to get cybersecurity business insurance if you have your company information on hand. Our insurance application will ask for basic facts about your business, such as revenue and the number of employees. You can buy a policy online and get a certificate of insurance (COI) with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurers to find insurance for your cybersecurity company, whether you work independently or hire employees.
Verified business insurance reviews
Hear from customers like you who purchased small business insurance.
"Many cybersecurity firms need both cyber coverage and tech E&O insurance because a single incident can involve a data breach and claims of professional negligence."
– Jacob M., Senior Account Manager, Insureon
FAQs about cybersecurity services company insurance
Review answers to frequently asked questions (FAQs) about cybersecurity business insurance, security consultant insurance, and more.
Why is business insurance important for cybersecurity companies and consultants?
Cybersecurity company owners may think their business is a low-risk operation. However, even a minor client dispute or data incident can have serious financial and reputational consequences—whether you’re just starting your business or are well established.
Clients rely on your expertise to keep their systems and information secure. If something goes wrong—a breach, social engineering attack, or software misstep—it could lead to costly claims or lawsuits.
Here’s a closer look at two key insurance products and why you should carry them:
- Cyber insurance helps protect your business if a data breach, ransomware attack, or other cyber incident occurs. Coverage can include customer notifications, credit monitoring, legal fees, and regulatory fines. Many policies also provide access to a 24/7 breach response hotline to help you respond quickly and limit damage.
- Technology errors and omissions insurance, sometimes called tech E&O or tech professional liability insurance, helps cover legal fees and court costs if a client claims your services caused financial harm. For example, a client could sue if a security assessment or software implementation leads to data loss, system failure, or downtime that disrupts their business.
Together, these policies not only help protect your business financially, but also ensure you can meet client contract requirements and respond promptly to cyber incidents.
Are cybersecurity businesses required to have insurance?
In many cases, there are several policies not required by law. However cybersecurity businesses can protect their livelihoods and qualify for contracts and leases by carrying the right insurance coverage. For some cybersecurity companies, workers' compensation and commercial auto insurance may be required.
Typically, cybersecurity providers will apply for general liability insurance first. This policy helps cover common business risks such as customer injuries, damage to a customer’s property, and advertising injuries.
Even small businesses are vulnerable to the same exposures and lawsuits as larger businesses. This is another reason why you should consider cybersecurity business insurance.
In order to accept certain contracts, you may need to have a fidelity bond, which reimburses the client if one of your employees commits fraud, theft, or forgery.
Do cybersecurity professionals need professional liability insurance?
Similar to other technology-focused businesses, cybersecurity firms aren't required by law to carry professional liability insurance. However, it should be a key component of your risk management plan.
Professional liability coverage, also called professional indemnity insurance or errors and omissions (E&O) insurance, protects you in the event a client files a lawsuit against your cybersecurity company for an error, mistake, or allegation of professional negligence.
You can bundle professional liability insurance for cybersecurity businesses with cyber insurance into a technology professional liability policy, which is more commonly referred to as tech E&O. This would be a more affordable insurance option than purchasing the policies individually.
Do I need insurance if I’m a self-employed cybersecurity consultant?
Yes. Self-employed cybersecurity consultants face many of the same risks as small businesses. Even a single mistake—like a misconfigured security program or delayed patch—can lead to a client experiencing a data breach. Without insurance, you could be personally responsible for costly lawsuits, legal fees, and damages, which can quickly threaten your financial stability.
Other risks include accidental property damage (such as damaging a client’s equipment), liability from third-party software errors, or injuries from work-related strain like carpal tunnel. Additionally, regulatory fines or penalties can arise if sensitive data is compromised and you're found noncompliant.
Cybersecurity business insurance protects independent contractors and sole proprietors by covering these expenses and more. Many clients also require proof of coverage before signing a contract, making insurance not only a safeguard but also a key part of doing business professionally.
What's the difference between first-party and third-party cyber liability insurance?
When buying tech E&O and cyber insurance, you may come across the following terms:
- First-party cyber insurance: Also called data breach insurance, this protects your own business from cyber incidents. For example, this includes a data breach exposing customer emails, financial information, or other sensitive personal data your company stores. The type of data you handle—such as PHI (health information), financial records, or login credentials—can also impact both the coverage you need and the cost of your policy.
- Third-party cyber insurance: This covers your responsibility for protecting against cyber risks that affect other businesses or clients. For instance, if you provide cybersecurity services and a vulnerability in your work leads to a client’s data being exposed, third-party coverage can help pay for legal fees, settlements, and associated expenses.
Tech E&O policies often include a retroactive date, which determines how far back incidents are covered. If a claim arises from work you performed before this date, it may not be covered. Choosing an appropriate retroactive date is critical for businesses that handle sensitive data or have ongoing contracts, as it ensures past work is protected.
First-party coverage can often be added to a general liability policy or BOP, while third-party cyber coverage is typically included in tech E&O insurance. Selecting the right coverage depends on the type of data your business handles and the risks you face, both of which can influence your policy needs and premiums.
What other types of insurance do cybersecurity companies need?
Outside of tech E&O and cyber insurance coverage, there are a few other policies cybersecurity companies and consultants should consider including in their insurance plan:
- Business owner's policy (BOP) combines general liability coverage with commercial property insurance at a discount. It protects against common third-party lawsuits and business property damage.
- Commercial property insurance covers your business property and equipment if it's damaged, lost, or stolen at your fixed business location. Should your machinery or equipment suffer a mechanical or electrical failure, equipment breakdown coverage would provide the funds to repair or replace the damaged equipment.
- Electronic data processing insurance covers electronic devices such as computers, storage devices, and the data they contain during a power surge, fire, natural disaster, or similar incident. Also known as computer coverage or data processing coverage, EDP insurance can help protect your business income against financial losses from data corruption or loss.
- Business income insurance, also known as business interruption coverage, offsets your lost income when your business is forced to close because of a covered peril, such as property damage. These funds help you cover your normal operating expenses until you can resume business operations.
- Employment practices liability insurance (EPLI) safeguards your business if you're sued by an employee over wrongful termination or another violation of employee rights. EPLI can also be added as an endorsement to a general liability or business owner's policy.
- Directors and officers (D&O) insurance protects your board members and officers from legal expenses if they're sued due to a decision they made on behalf of the company that led to a financial loss. D&O is a type of management liability insurance that provides reimbursement for legal costs (indemnification) over lawsuits related to mismanaged funds, employee grievances, failure to comply with regulations, and more.
How can I save money on cybersecurity business insurance policies?
There are many steps you can take to get affordable coverage that meets your insurance needs. You can start by comparing free business insurance quotes from leading insurance companies with Insureon.
Our licensed insurance agents can help make sure you get the right, most affordable coverage for your specific needs. Most small businesses can get insured and download a certificate of insurance (COI) within hours of applying for quotes.