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Insurance is something every business needs. General liability insurance typically covers bodily injury, property damage and personal injury claims from third parties. But this type of insurance doesn’t cover all types of business incidents.
Cyber incidents can be found in a variety of forms such as cybercrime, IT outages and data breaches. One thing they all have in common, though, is the potential to damage both the bottom line and the reputation of a company.
A layered cybersecurity strategy will often deter, or at least slow down, a cybercriminal. But what if that’s not enough and a data breach or ransomware event occurs? Cyber liability insurance could help a business get back to day-to-day operations, faster.
Business data breaches due to cyberattacks have been on a significant upward trend in recent years. This is why cyber insurance policies have become popular (and often necessary) to help mitigate the cost of recovery from a data breach incident.
In this article, we’ll take a closer look at these frequently asked questions:
- What Is Cyber Liability Insurance?
- Who Needs Cyber Liability Insurance?
- What Might a Business Need to Qualify for a Cyber Insurance Policy?
- How Much Does Cyber Insurance Cost?
Being prepared for a worst day scenario could very well allow your organization to survive and continue business operations after a cyber incident.
What Is Cyber Liability Insurance?
Cyber liability insurance is a class of insurance intended to protect both individuals and businesses from internet-based risks, such as cyberthreats or other data breaches, as well as losses resulting from problems with IT infrastructure.
A licensed insurance broker will facilitate a discussion with a client company (and sometimes their Managed IT partner, too) about their needs and potential risks. This information will aid in constructing a cyber insurance policy and, sometimes, identify cyber security gaps that may need to be addressed.
A cyber insurance policy will help ensure that the client company is financially compensated if they are unfortunately involved in a cyber incident. A skilled insurance broker with experience in cyber liability insurance will benefit any business, as the broker will walk a client through each step in the process to make sure that coverage is appropriate. This is especially valuable for companies that have never experienced a cyber incident.
Who Needs Cyber Liability Insurance?
Cyberthreats are everywhere—and they don’t discriminate. Whether you’re running a local manufacturing company or a multi-location healthcare network, any business that stores data digitally should consider cyber liability insurance. It’s especially critical for industries where strict data protection regulations apply, such as:
For example, healthcare and insurance providers must comply with HIPAA, while retailers follow PCI-DSS standards.
Even if cyber insurance isn’t legally required, it’s often recommended to help cover breach-related costs like customer notification, legal fees, and regulatory fines. Plus, many vendors, suppliers, and government contracts now require cyber insurance as part of doing business.
Bottom line? If your business handles sensitive data or connects to other systems, cyber liability insurance isn’t just smart—it’s becoming essential.
What Might a Business Need to Qualify for a Cyber Insurance Policy?
Cyber insurance isn’t just a smart move—it’s often a requirement. Many insurers, vendors, and suppliers now include cyber liability coverage as part of doing business, especially if you handle sensitive data or connect to external systems. But qualifying for a policy isn’t automatic. Insurers want to see that your business takes cybersecurity seriously.
To get covered, you may need to implement:
- Multi-factor authentication (MFA)
- Endpoint detection and response (EDR)
- Encrypted backups
- Incident response plans
- Employee security training
These aren’t just checkboxes—they’re foundational to protecting your business from today’s evolving threats. Think of it as building a digital defense system that not only keeps your data safe but also makes you insurable.
How Much Does Cyber Insurance Cost?
Each insurance carrier calculates cyber insurance differently, so it’s a good idea to know what all of the factors are being used to calculate your cost. Some of these factors you may have control over, and others you won’t.
For instance, having more layers of cybersecurity may mean a lower price when purchasing cyber insurance. However, businesses in highly targeted industries may have higher risk and therefore more costly cyber insurance.
Want to unlock the best rates? Having a SIEM/SOC solution, is an excellent start.
Cybercriminals are becoming savvier and more defiant in their attacks. Download our Cybersecurity Handbook and we’ll outline a simple, yet effective set of cybersecurity practices that support risk management functions. You’ll learn what your organization can do to combat cybercrime and read real-life stories of companies that faced cyberattacks and what happened next.
