What is Cyber Liability Insurance? | Travelers Insurance (2024)

FAQs

What does cyber liability insurance cover? ›

Data recovery: A cyber liability insurance policy usually enables businesses to pay for the recovery of any data compromised by an attack. System damage repair: The cost of repairing computer systems damaged by a cyberattack will also be covered by a cyber insurance policy.

Crucially, a cyber liability policy protects your business beyond the basics of a general liability policy, which on its own typically does not protect against the operational, legal, and other costs arising from cyberattacks and data breaches.

Today, the average cost of cyber claims is substantial, far exceeding the average cost of cyber premiums. And considering the proactive and reactive services on offer, it's clear that cyber insurance is more than worth the money.

Your industry. Certain industries are subject to higher premiums because they are more susceptible to threats. Hospitals, for example, are a major target of ransomware attacks because they store sensitive patient data and will often choose to pay ransoms rather than risk their patients' lives by going offline.

Potential future lost profits

But they won't cover profits lost after an incident as a direct or indirect result. Devaluation of affected data, a company's diminished market share, profits lost due to reputation damage—most policies exclude such potential losses.

Cyber insurance coverage exclusions in an insurance policy can include failure to maintain standards, payment card industry (PCI) fines and assessments, prior acts, acts of war, and more.

Most small businesses purchase a cyber liability insurance policy with a $1 million per-occurrence limit, a $1 million aggregate limit, and a $1,000 deductible.

If you own a business that collects or stores sensitive information, such as customer/supplier data or financial information, you may be at risk. Cyber insurance can help protect you from the financial consequences of a breach of these data and a disruption of your business.

Demand, losses, and premiums are all on the rise

The demand for cyber insurance coverage is skyrocketing. At the same time, insurance providers' losses are growing. High demand in combination with high payouts lead to increased premiums. Businesses report premium hikes of 50% and even 100% year over year.

Any business that stores or processes sensitive information should consider cyber liability insurance. Consider coverage if you store data such as customer names and addresses, Social Security numbers, medical records, and financial information such as credit card information.

Does cyber insurance pay out? ›

Cyber insurance covers the liability actions that might be brought against you, arising out of a cyber event (third party loss), such as investigation and defence costs, civil damages, compensation payments to affected parties.

From defraying costs following a potential incident to indemnification for legal fees, small business cyber insurance helps ensure protection against events like data breaches of client information and ransomware attacks.

While cyber insurance isn't always required for every organization, it's something most should be considering (and may actually be a contractual obligation with clients!).

Crucially, a cyber liability policy protects your business beyond the basics of a general liability policy, which on its own typically does not protect against the operational, legal, and other costs arising from cyberattacks and data breaches.

Personal cyber insurance covers individuals for their personal online security risks and financial loss due to cybercrime. Cybercrimes and risks include: Online account takeover or compromise. Expenses incurred or financial loss due to identity theft or social engineering scams.

Cyber liability insurance typically covers expenses related to restoring damaged or destroyed data, investigating and responding to incidents, lost income due to interruption of operations, and more. Cybercrime and fraud are ever-present business risks that require investments of time and resources to manage.

Media liability insurance is similar to several other policies. For example, cyber liability safeguards your business against damages from any electronic activities. And errors and omissions (E&O) insurance, otherwise known as professional liability, protects companies against lawsuits of inferior work or service.

Website Media Content

AmTrust's Cyber Liability policy also includes coverage for Website Media Content Liability.

Cyber insurance generally covers your business' liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver's license numbers and health records.