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Best Cyber Liability Insurance for Small Businesses of 2024

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Quotes available through: Simply Business
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KEY TAKEAWAYS
  • Cyber liability insurance provides financial protection if your business falls prey to a data breach or other malicious attacks.
  • Cyber liability insurance typically covers data breaches initiated outside of the company (cyberattack), but not internal leaks due to carelessness. Therefore, it’s often called “cyber security insurance” or simply “cyber insurance”.
  • Cyber insurance covers out-of-pocket costs related to: notifying victims of a security breach, repairing systems, as well as reimbursement for lost revenue.
  • This type of insurance is especially helpful for businesses that store sensitive customer data, like those in the retail, healthcare, and financial services industries.
  • We recommend using an online quote tool to be matched with the right business insurance plan for your company - including cyber liability coverage.

If you’re like me, you have been reading in the news about the recent spike in the number of cyberattacks on businesses around the world. From the ransomware attacks that shut down the Colonial Pipeline in 2021, to cyberattacks on LA county schools, any business that uses computers or data storage systems could be at risk. As a result, cyber liability insurance has become a must-have for businesses of all sizes.

Whether you’re just starting out or have been in business for years, understanding your risks and finding the best business insurance to protect yourself against them is essential in today’s digital world. With cyber insurance, you can protect your business from financial losses due to data breaches, malicious attacks, and other online threats.

In this guide, we’ll walk you through these questions:

  • What is cyber liability insurance?
  • What does cyber liability insurance cover?
  • Who needs cyber liability insurance?

By understanding these details, you’ll be able to make an informed decision when choosing the right cyber coverage for you and your business.

So, without further delay, here are our top picks for the best cyber insurance for small business.

Our top picks for the best cyber liability insurance

Our top pick for cyber insurance for small businesses

Advertiser Disclosure

USG Insurance Services, Inc.

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AMB Financial Strength
A- (Excellent)
Specialized for:
Small Businesses

Why We Like It

With the growing need for cyber security coverage, look no further than USG Insurance Services, Inc.

USG offers top-notch Cyber Liability insurance to protect small and micro-businesses from cyber-attacks and data breaches originating from outside your company.

Plans are available for a broad range of business types and come backed by North American Data Security as well as a solid AM Best financial rating of A-. USG operates 20+ branches across the country, meaning you’re sure to have a regional or local office nearby to support you with queries and account management help when needed.

Coverage Highlights

Cyber Liability Coverage through USG offers access to:

  • $250k occurrence limit & $250k aggregate limit

Other coverage highlights for Cyber Liability include:

  • $1k deductible
  • $250/year flat rate of coverage
Need cyber liability coverage? Get a free quote in minutes! Suitcase and Shield With Checkmark GET A QUOTE

What is cyber insurance?

Cyber insurance is a type of business insurance specifically designed to cover the damages and losses associated with cyber security incidents such as data breaches, malicious attacks, and other cyber events.

It provides coverage for businesses from financial loss resulting from a variety of cyber threats, including those impacting third parties or customers.

What is the difference between cyber liability and data breach insurance?

Cyber liability insurance is a type of insurance that helps pay for damages or losses from cyber security incidents, like breaches and malicious attacks. Similarly, data breach insurance helps pay for damages or losses from a breach.

The main difference is that cyber liability coverage is specifically designed for attacks originating outside of your company, whereas data breaches can occur from within. Also, data breach insurance typically does not cover the cost of legal protection—something that is often included in cyber liability coverage.

What does cyber insurance cover?

Cyber liability coverage helps pay for damages or losses associated with a cyber incident, such as those resulting from external data breaches, hacking incidents, malware and ransomware attacks, system failures, or other cybercrime.

It can help cover the cost of restoring or replacing compromised systems or information, lost data, and customer notifications following security incidents. It can also help cover your business during a cyber attack and pay for expenses relating to extortion, forensics and legal investigations, crisis management, fraud response, and public relations.

In some cases, you may find yourself in a lawsuit after a breach of personal data. In this case, cyber insurance coverage can provide financial protection from lawsuits brought by customers who may have suffered financial loss due to a breach. This often includes legal expenses related to defending against allegations of negligence on behalf of the business in the event of a cyber attack.

Any non-cyber-related incidents will need additional coverage such as business personal property insurance, workers comp, and professional liability insurance to protect your business from damages such as injuries, business malpractice, and acts of sabotage.

These are some of the major issues covered by a cyber policy:

1

Data breach and cyberattack costs

Cyber liability insurance helps cover costs when there are cyberattacks or data breaches. It pays for things like replacing computers or information, recovering lost data, and telling customers about the breach. To cover possible damage to your technical equipment such as computers or other tools, we highly recommend purchasing inland marine insurance. It also pays for legal bills if someone sues you because of a cyberattack or data breach. Some policies include coverage for ransom payments, but this is not always included.

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2

Network interruption of business operations

Cyber liability insurance helps pay for lost business income due to network failure caused by cyberattacks or data breaches. It also pays for expenses related to restoring normal operations and any reputational damage caused by the breach.

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3

Repair and recovery

Cyber liability insurance helps cover the costs of repairing or replacing systems that have been damaged or lost due to a cyberattack or data breach. Data recovery costs may also be covered as part of a cyber liability insurance plan.

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4

Technology error and omission coverage

This type of coverage helps cover any technology errors or omissions that may lead to a data breach or other cyber security incidents. It pays for related expenses such as legal fees, third-party damages, and customer notifications.

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5

Regulatory fines

Cyber liability insurance may help pay for any fines imposed by regulatory bodies due to a cyberattack or data breach. This includes things like GDPR and HIPAA fines, which can be very expensive if not covered by a policy.

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In short, cyber liability insurance provides coverage for various risks associated with cyber security incidents, such as data breaches, malicious attacks, and other cyber-related events. However, it typically does not cover things like employee negligence, copyright infringement, or employee-caused data breaches.

To help you understand how this insurance would work in the event of a cyberattack, let’s look at some real-world examples of data breaches.

How does cyber insurance work?

Cyber liability insurance works by providing financial protection to businesses in the event of a cyber-related incident.

Here’s a general overview of how the process works:

  1. You purchase a cyber liability insurance policy from an insurer that meets your business needs and risk profile.
  2. In the event of a cyber incident, such as a data breach or cyber attack, you notify your insurer as soon as possible and provide details about the incident and any relevant documentation. Your insurer assigns a claims adjuster to investigate the incident and determine whether your policy covers the loss.
  3. If your policy covers the loss, your insurer will pay for the covered expenses, such as data recovery costs, business interruption, legal fees, and settlement or judgment costs.

If your policy does not cover the loss, you may need to pay for the expenses out of pocket.

It’s important to note that cyber liability insurance policies can vary widely in terms of coverage, exclusions, deductibles, and limits. To ensure that your business is adequately protected, you should carefully review the policy terms and conditions and work with your insurer to assess your risk profile.

Here are three examples relating to different types of cyberattacks showing how cyber liability insurance can help your business:

Phishing Attack Example

A phishing attack is one of the most common forms of cyber attack that can result in a data breach and financial loss for a business. In this type of attack, malicious actors send emails that appear to be from legitimate sources asking the recipient to enter personal information such as usernames, passwords, or credit card details. If this information is entered into the malicious website, fraudsters can use it to commit identity theft, gain access to bank accounts or steal company data.

In the event of a phishing attack, cybersecurity insurance can cover the costs associated with:

It may also cover legal fees associated with defending against a lawsuit.

Ransomware Attack Example

During a ransomware attack, malicious actors encrypt valuable data on the target’s computer system. They then demand a ransom payment in exchange for releasing the encrypted data back to the organization. Failing to pay could mean permanent damage to systems and sensitive data falling into the wrong hands. Ransomware attacks are becoming increasingly common and they can do significant damage to businesses if not addressed quickly.

Cyber insurance policies can help protect businesses by covering costs associated with file restoration and system repairs, as well as losses due to downtime caused by the incident.

Malware Attack Example

Malware is software designed specifically by hackers to gain unauthorized access or control over computer networks or computers. Once cybercriminals access the system, they can steal sensitive data or disrupt operations. A malware attack may also involve malware being sent via email or through malicious websites that infect devices if opened.

In this case, cyber insurance policies can provide:

How much does cyber liability insurance cost?

The cost of cyber liability insurance will vary based on the type and extent of coverage, but it typically costs between $250 and $5,000 per year.

Smaller businesses—and those facing less cyber risk—may be able to secure coverage for less. The size of your company and the value of your assets should also factor into how much you pay for cyber liability insurance coverage.

For example, we got a quote for cyber insurance using Simply Business’s quote-building tool. For an apparel and clothing retailer located in Los Angeles, USG quoted a total price of $250 per year for $250,000 of coverage per occurrence ($250,000 aggregate) with a $1,000 deductible for all claims. Available quotes and coverage amounts were the same for a range of business types.

In some cases, businesses may be eligible for discounts if they have comprehensive IT security protocols in place. An experienced cybersecurity specialist can help you evaluate your needs and find an appropriate policy that fits within your budget.

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Call for free to discuss costs with an insurance professional!

Why do small businesses need cyber liability insurance?

While it may seem like only larger businesses need cyber insurance coverage, small businesses, such as an e-commerce business are arguably at greater risk for cyberattacks as they typically have less robust cyber security in place.

Even if you have robust security systems in place, no company is immune to the risks associated with cyber threats.

Cyberattacks typically involve costly responses that can decimate the bottom line of your company. Typically, a small business owner would need to identify and rectify the data breach, notify the affected customers, and typically pay for credit monitoring services for a period of time for all those affected. This can end up being time-consuming and expensive.

According to the insurance provider, Simply Business, just the investigation into what happened could cost between $10,000 and $100,000 alone. Not to mention the aftermath and using a PR company to clean up your brand image.

For these reasons, it’s a good idea for any organization that relies on technology to conduct business to consider investing in cyber liability insurance. This includes companies of all sizes, ranging from small businesses to large enterprises.

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Even solo workers need protection. There are special policies suited for sole proprietors who work alone. These can include workers comp, as well as other liability coverage to protect the business owner or customers whether at home or while on the job.
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Contractor-specific insurance plans can help cover theft, damage, or loss of movable equipment needed for construction. It can also cover claims relating to personal & physical injury or illness to employees or third parties, and more.
Insurance for photographers can cover your equipment on and off-premises. Get coverage for payouts resulting from bodily & personal injury, negligence, photo/video leaks, and more.
Esthetician Insurance can cover you as a sole proprietor or with employees. Ensure your supplies are covered in case of damage, theft, or loss. Get general & professional liability protection regardless of if you work in a fixed location or visit clients’ homes, and more.
Get coverage for you and your employees in case of injury or illness. Protect your equipment, supplies, and furniture from theft & damage. Ensure visitors and clients are covered in case of personal or bodily injury as a result of business operations.
Get protection from liability and injury to clients regardless of your working location. Insurance for personal trainers can also cover damage or theft of equipment, as well as pay for medical bills or lost wages, and more.
Handyman insurance provides coverage for a range of risks faced by handyman businesses. It typically includes protection for bodily injury and property damage liabilities, personal and advertising injury claims, products liability, and completed operations.
Electrician’s insurance protects your equipment while on the job or moving about. You can also get coverage in case you, an employee, or a client gets injured. Protections can also cover claims of negligence or errors in your work, and much more.
Protect your merchandise and goods while in transport or storage. E-commerce business insurance can also protect you from cyber-related risks, such as hacking and data breaches. Blanket coverage is available for general & professional liability, and more.
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Is cyber insurance required by law?

Cyber insurance is not legally required, but in certain industries or organizations, it may be necessary. This is especially true for industries handling sensitive customer data such as health information, personal ID information such as tax ID numbers, social security numbers, or banking and credit card information.

On another note, some companies or customers may require that their partners or vendors have cyber liability coverage before conducting business with them.

What type of cyber liability insurance do I need?

Cyber liability covers more than just data breaches, so it may be better than data breach coverage if you need protection from other cyber-related events.

This is especially true when it comes to insurance for online businesses. However, if your main concern is data breaches, consider getting a data breach policy, as may be appropriate for sole proprietorship insurance.

Ultimately, it depends on your individual needs and the types of cyber security incidents your business is most vulnerable to. A knowledgeable insurance agent can help you evaluate your risks and develop a customized cyber liability insurance policy that meets your needs and budget.

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Speak to an insurance professional for free!

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Cyber Liability Insurance FAQ

Won’t my general liability insurance cover cyber liability?

General liability insurance does not cover cyber liability. This type of coverage typically covers physical injury, property damage, and other traditional forms of liability. Cyber liability is a unique form of insurance that provides coverage for events like business interruption due to compromised networks, data breaches, and cyberattacks. These specialized cyber policies can also cover legal fees resulting from a security incident or data breach, technology errors and omissions, and regulatory fines related to data breaches or other security incidents.

What’s the difference between cyber liability insurance and technology errors and omissions insurance?

The main difference between cyber liability insurance and technology errors and omissions insurance is the type of coverage they provide. Cyber liability insurance helps cover costs when there are cyberattacks or data breaches and pays for legal bills for lawsuits related to the breach.

Technology errors and omissions insurance, on the other hand, helps cover any technology errors or omissions that may lead to a data breach or other cyber security incidents. This includes things like legal fees, third-party damages, and customer notifications if an incident was caused by an error in your tech systems.

Is it worth getting cyber liability insurance?

If your business relies on technology for its operations, digitally stores proprietary data, or routinely handles sensitive customer information, it is definitely worth getting cyber liability insurance. Cyberattacks and data breaches can have catastrophic consequences for businesses, leading to reputational damage, repair and recovery costs, and regulatory fines. Having the right cyber liability policy in place can help cover these costs and provide valuable protection to your business.

What does cyber liability insurance not cover?

Cyber liability insurance does not typically cover any costs related to physical property damage, information theft from the insured’s premises or employees, or criminal acts such as fraud. Cyber liability insurance is intended to provide coverage for events that occur online, so will not protect a business if there are major issues in the hardware or software that it uses. It also doesn’t cover errors and omissions made by third-party vendors hired by the company.

Finally, cyber liability policies may not cover fines imposed by regulatory bodies such as GDPR and HIPAA fines, unless they’re specifically included in a policy. To make sure you are properly protected against all types of cyber risks, it is best to seek advice from an experienced insurance agent when selecting your policy.

Kiah Treece
Kiah Treece Business Finance

Kiah Treece is a business finance expert with more than five years of editorial experience. Through her experience as?a small business owner, real estate investor, and lawyer, she’s knowledgeable in the areas of banking, loans, financing, and insurance for small businesses. Her first-hand experience has enabled her to?break down complex?financial topics to help?consumers make informed decisions so they can spend their money wisely.

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