What is Cyber Liability Insurance?
Cyber liability insurance is when a data breach or cyber attack affects your tech company or your clients, cyber liability insurance can pay for legal expenses, credit monitoring services, and other recovery costs.
Does you company need Cyber Liability Insurance?
If hackers steal sensitive information or hold data or services hostage, your business pays the price. In fact, the average cost of a small business data breach is $86,500, according to the internet security firm Kaspersky Labs.
Some small tech companies assume hackers target only large companies. But nearly a third of all cyber attacks hit small and medium-sized businesses. These attacks are often successful, since smaller tech companies are less likely to have a strong defense against hackers.
Companies that purchase a cyber liability policy often handle:
Credit card or bank account information
Social Security or driver’s license numbers
Customer names, email addresses, phone numbers, and addresses
Cyber security for other businesses
First-party versus third-party Cyber Liability Insurance
You can purchase two types of cyber liability coverage: first-party and third-party.
First-party coverage helps your business recover immediately following a data breach or cyber attack at your company.
Third-party cyber liability coverage offers protection if a business partner or client sues you for failing to prevent a data breach at their business.
Many cyber liability insurance policies include both types of coverage. Read more about first-party vs. third-party cyber coverage.
First-party response coverage can cover the cost of:
Credit monitoring services
Anti-fraud protection for customers
Security incident investigations
Insider data breaches
Cyber extortion / ransomware costs
Third-party defense and liability coverage can cover the cost of:
Attorneys to defend your company
Settlement costs (to resolve a lawsuit amicably)
Court-ordered damages (if you’re found liable)
Miscellaneous court costs
Cyber Liability Insurance Costs
Companies pay about $145 per month for cyber liability insurance. The cost of insurance varies based on:
Number of employees
Volume and type of data handled
Policy coverage limits
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