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Types of Cyber Liability Insurance Coverage

Cyber liability insurance is there to protect you and your small business from a variety of security threats such as extortion through ransomware, data breaches, and can even help protect your reputation from hacked social media accounts. Cyber liability insurance also protects other individuals and businesses that may be harmed by your small business unintentionally spreading a virus or mistakes, errors, and omissions made by one of your employees. The type of protection you need will depend on your small business’ web presence and use of cloud-based systems. And of course, awareness of emerging novel cyber threats is essential. There are two primary types of coverage:

First-Party Coverage

This type of coverage protects your company from data and financial losses your company might experience due to a data breach, and includes costs associated with repairing and restoring affected technology, crisis management, hiring a human relations firm to handle data breaches, forensic analysis, and the loss of business income.

Third-Party Coverage

This type of coverage protects you in the event of a data breach resulting in a customer or partner bringing legal action against your small business. If you handle any kind of sensitive data that is impacted by a data breach, third-party coverage can help with legal fees, settlements, and judgements against you.

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Mitigating Risks for Small Businesses

Maybe your small business only needs to mitigate specific risks. If that is the case, there are also cyber liability coverage options against specific risks you may face:

Ransom Coverage

This coverage provides protection if your business is being extorted by an outside party limiting or blocking you and your employees’ access to company systems.

Regulatory Claim Coverage

This coverage helps mitigate the cost of state and federal fines associated with data breaches that are found to violate disclosure and privacy laws.

Business Interruption Coverage

This coverage can protect your revenue stream if a cyber-attack disrupts your day-to-day business operations for an extended period of time. Business interruption coverage can make sure that lost revenue is replaced while you work on recovering from a cyber security attack.

How Cyber Liability Insurance Cost Is Determined

Determining the cost of cyber liability insurance will take several factors into consideration. Here are just a few questions you may want to discuss with a cyber liability insurance agent to find the right amount of coverage for the right price:

What type(s) of secure data does your small business handle?

How much of your system is local access only vs. cloud/internet accessible?

How many employees handle/have access to company data?

What does your social media footprint look like?

Who could be harmed by a data breach within your small business?

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How Cyberattacks Happen

According to Cyber Security Magazine, 43% of all cyber attacks strike small businesses, and since the COVID-19 pandemic there has been a 600% increase in cyber-attacks. There are many ways to prepare you small business for these threats, including learning to recognize some of the most common threats out there:

Phishing Attacks

These are the most common types of cyber attacks because they are the easiest to automate. With increasing complexities in algorithms, some phishing schemes are becoming more challenging to recognize, but they often come in the form of an email requiring you to follow a link or download something.


This is another common threat that encompasses trojans and viruses. These are typically downloaded by accident because they look like programs you might regularly use.


This is when hackers gain access to your systems and lock you out, then hold access to your system hostage or threaten to release vital information if a ransom is not paid.

Easy-to-break Passwords

This is not often thought about, but there are likely programs running right now trying to break your passwords. Without the proper level of complexity, these bots will locate and access your secure data.


Automatically connecting to public Wi-Fi or Bluetooth, forgetting to log out of company accounts, or transacting secure business in public and without a VPN will give bad actors the means to breach your company systems.

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Frequently Asked Questions

Answers to Frequently Asked Cyber Liability Insurance Questions

What is Cyber Liability Insurance?

Cyber liability insurance protects you and your small business from the financial risk of having your IT systems compromised, including legal damages for which you may be held liable.

What does Cyber Liability Insurance cover?

Cyber liability insurance covers a variety of costs affiliated with cyber security threats, including the ability to pay legal fees and fines for damages, the cost to regain control of your systems after a ransomware attack, and even the ability to replace revenue your company lost due to a cyber-attack. Review your needs with a cyber liability insurance agent to determine your suitability before deciding on the coverage you need.

Who needs Cyber Liability Insurance?

With the significant rise in cyber-attacks, all small business owners should consider cyber liability insurance a necessity.

How much Cyber Liability Insurance do I need?

Determining the amount of cyber liability insurance you need depends on several factors. You should consider where your small business may be vulnerable, look at several options from different cyber liability insurance providers to get an idea of the options that are out there, and then consult with a specialist to find the best fit for you.

Why do I need Cyber Liability Insurance?

If your day-to-day operations depend on email, internet access, or any form of e-commerce, you are at risk of becoming the victim of a cyber-attack. Cyber liability insurance is the only way to ensure that you are financially protected in the event of any number of catastrophic data or security breaches.

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If you are considering protecting your small business from the variety of cyber-security threats out there, call Ansay & Associates today – we’ll make sure your company gets the protection it deserves.

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