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Cyberattacks have become more prevalent in recent years. With attacks on the rise, cybersecurity is becoming essential for companies. While cybersecurity defense measures add protection, they don’t guarantee safety. This is where cyber liability insurance comes into play.

Cyber liability insurance protects businesses from the high cost of recovering from a malicious software attack or data breach. While this type of insurance is relatively new, it has grown in popularity, especially for small businesses without a designated IT team.

What It Covers

Every cyber liability insurance solution is different, but a couple of expenses are typically covered under this insurance. Most cyber liability policies cover losses that directly influence the business and losses encountered by others from a cyber incident.

Business Losses

Cyberattacks can have debilitating effects on business operations, which leads to huge losses. Cyber liability insurance covers losses associated with network downtime, data loss recovery, and business interruption.

Notifications of Breach

Whenever a data breach occurs, a business is required by law (in most areas) to notify all impacted parties. Credit monitoring and notification expenses may be covered depending on the cyber liability policy type.


If the nature of the cyber attack involves the theft of confidential data and intellectual property, the business could be sued by third-party entities. A cyber liability insurance policy may cover legal expenses or extortion fees.


After a cyberattack, it’s customary to do a detailed forensic investigation to determine the nature of the breach and how to prevent its occurrence in the future. While the investigations are important, they can be expensive. Some cyber liability insurance policies cover these expenses.

Pros and Cons of Cyber Liability Insurance

When deciding if cyber liability insurance is right for a business, weighing the benefits and downsides is essential.


Reduced Risk

As with any insurance policy, a cyber liability insurance policy helps cover some of the costs of recovering from a cybersecurity incident. This coverage could mean the difference between recovering from the attack and going out of business.

Specialized Expertise

Given their experience in the industry, insurers often have access to specialists that can help businesses recover from the effects of a cyber incident. This immediate access to industry experts makes the recovery process more manageable.

Regulatory Compliance

Several data privacy laws require reporting for both regulators and consumers. A cybersecurity insurance policy helps cover the cost of generating and deploying those communications, as well as other legal penalties.



Due to the rise in cyberattacks, boosting cybersecurity with a good cyber liability policy can be expensive.

Limited Coverage

Cyber liability insurance policies help businesses recover from cyber-attacks, but they only cover part of the cost. Finding a policy covering the entire recovery cost can be hard.

Deciding on Cyber Liability Insurance

A cyber liability insurance policy can be a great way to add an extra layer of protection. Still, every business needs a cyber risk management strategy—whether it has a policy or not. Have questions about creating a cyber risk management strategy? Contact Us.