Cyber liability insurance compensates the insured business for financial losses resulting from a data breach or other forms of network intrusion. It covers the business for events like denial of service, ransomware, hacking, and malware attack.
Cyber liability insurance enables companies to recover and resume operations after a cyber attack on their network or their clients'. A first-party policy covers the following costs:
If you experience a data breach as a tech provider, an affected client can sue your company for not preventing the loss. In that case, third-party cyber liability insurance can protect your business by covering the following expenses:
Most businesses need some form of cyber insurance, and the policy is particularly essential for e-Commerce firms that handle and store sensitive data. If you work with personally identifiable information (PII), credit card numbers, or personal contact details, you should consider having proper protection. A single breach can result in huge revenue losses, unhappy customers, or worse.
Even if you don't sell anything online, you may need a cyber liability insurance policy if you process or store any type of data on the web. The coverage will provide extra protection if you lose confidential employee files or important customer data after a cyberattack.
If you own a small technology company, consider investing in cyber liability insurance as follows:
If you maintain a few thousand records, this coverage will sufficiently protect your company after a data breach. High-risk tech firms like cloud storage providers may need higher coverage amounts, such as $5 million. Also, it's often better to bundle your cyber liability insurance coverage with a tech errors and omissions (E&O) policy that includes first-party cyber liability insurance.
If you're an independent contractor, you probably don't need first-party cyber liability insurance, as the coverage is for data breaches that occur on your company's network. However, third-party cyber liability protection may be necessary to protect your business against lawsuits. Sometimes, independent contractors must have proof of third-party cyber liability insurance to get contracts from clients. Most of these contracts require a coverage limit of $1 million per data breach.
Cyber liability insurance policies differ in the specific risks covered, and coverage requirements vary from business to business. Here are some crucial considerations to get the right amount and type of cyber liability protection: