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Cyber Liability Insurance: A Growing Trend

November 4, 2015


What is cyber liability insurance?

Cyber liability coverage covers a business’ liability for a data breach in which the business’ customers’ personal information is stolen by an employee or a hacker. This liability may include monetary business losses, recompense of funds stolen from your customers’ accounts, costs of investigating the crime, costs associated with reestablishing the customers’ credit to pre-crime status, and legal fees.

Coverage offered for data breaches vary greatly from carrier to carrier.  The types of coverage prudent for a given business varies depending on the size of the business, the industry involved, the amount of risk exposure, existing security procedures and what other coverage the business already has in place. Umbrella policies do not cover cyber liability.


Cyber liability insurance has been around for a decade, though many people have never heard of it.  In the beginning, only tech companies, finance companies, and healthcare related companies were interested in coverage.  They had a much greater risk exposure than most other companies.  Because of the small premium pool, coverage was highly expensive.

The internet is changing all that.

As more companies store their customers’ information on computers, they have more risk of being hacked.  Businesses that take payments over the internet especially have more risk.  As a result, more businesses are managing their risk by buying cyber liability insurance.  As the pool of businesses paying premiums increases, the cost of cyber liability insurance is decreasing.

Who needs cyber liability insurance?

I don’t know how many times I’ve heard small business owners reply to questions on security by saying, “No one would want my information” or “I’m too small for anyone to hack me”.  Wrong!  Hackers are opportunists.  Small companies that don’t pay much attention to security are exactly the companies they look for.  Small companies may not make the news when they get hacked, but they do get hacked.

Also, the term “cyber” comes from the stolen information being electronic data, not because it is stolen through the internet.  As much as no one likes the thought that an employee would steal from their employer, it happens.  An employee can walk off with a credit card receipt or download information onto a thumb drive.  That’s still “cyber” and covered under this type of insurance.

Susan O’Kelley, Insurance Broker and owner of Avanti Insurance Services, recommends any retail outfit, online or brick and mortar, have some kind of cyber liability insurance. The costs associated with being hacked are too enormous not to have coverage.  Often small businesses go broke dealing with such expenses.

What coverage should I get?

That depends on the nature of your business. As stated earlier, size, industry, existing security and many other variables affect which coverage is right for your business.  This type of coverage is very individualized. Sitting down with your broker and really going over your business model is the best choice.

Good luck!

—E. A. Cooke


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One Comment
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