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What is Cyber Liability Insurance?

What is Cyber Liability Insurance?

We shouldn’t have to tell you that cybercrime is a bigger problem than it has ever been. With each passing year, it seems that these kinds of criminals become more creative and more devious. When one method stops working, they simply find another one.

Of course, cybercriminals usually prey upon those who have neither the knowledge nor the inclination to protect themselves properly. In other words, they prey on companies and individuals who are not well-versed in cybersecurity or the various threats out there. Since these kinds of attacks cannot always be prevented, it makes sense to have a backup plan. In many cases, that backup plan will include cyber liability insurance.

What Is Cyber Liability Insurance?

This is a specific type of insurance policy, sometimes called cyber risk insurance. Just as a life insurance policy pays out in the event of death, cyber insurance coverage will payout in the event of a cyberattack on the covered organization. Since you cannot always necessarily prevent these attacks, an insurance policy like this can act as an effective backup plan.

Who Needs Cyber Liability Insurance?

Cyber coverage insurance is necessary for any organization with valuable assets to protect. In particular, those companies that handle a lot of sensitive and/or valuable data will need this kind of policy. Companies that handle such information are more likely to be targeted. It is not easy for hackers to directly steal resources like money and valuables. Thus, in nearly all cases, they have to gain some kind of privileged information first.

Here are some examples of the sort of privileged and valuable information that might be sought by cyber criminals:

  • Bank account credentials
  • Credit card numbers
  • Private medical information
  • Personally identifying information like social security numbers or driver’s license numbers
  • Cybersecurity information about another potential target
  • Personal customer data that can be used for impersonation

This brings us to the factor of social engineering attacks. These are hacking methods that work by taking advantage of the human element. Basically, they find someone who isn’t very knowledgeable and take advantage of them. By tricking legitimate users into revealing valuable information, they can bypass any digital security measure.

For this reason, it is impossible to make your company immune to cybercrime. No matter how much money you spend, the risk will always be there. Once again, that is why you need a backup plan just in case one of those attacks manages to succeed. And so, we can say that virtually every large company (and even most of the smaller ones) should have some degree of cyber risk insurance.

What Kinds Of Expenses Will Be Covered?

When you get a policy of this kind, you will need to work with your insurance provider to create a plan that is right for you. There are a lot of expenses that can be associated with cyber attacks, and all of them can potentially be covered. As with any other policy, better coverage equals higher premiums. Thus, you will need to balance your needs against your budget.

The following are some of the expenses that might be covered by a cyber liability insurance policy:

  • The costs of any post-incident investigations that need to be done
  • The cost of paying a ransomware payment
  • Compensation for lost business and revenue
  • Any legal expenses that might be incurred
  • Any fines that might be levied by the authorities
  • PR costs associated with post-incident response
  • Mitigation of vulnerabilities in order to prevent future attacks

What Kinds Of Expenses Will Not Be Covered?

Like any insurance policy, a cyber policy will not pay out on every claim. If they did that, they would quickly find themselves out of business. Before signing on the dotted line for any insurance policy, you should always read these “exceptions” thoroughly. Here are some expenses that will not be covered by most cyber insurance policies:

  • Insider Attacks: This means anything that was intentionally done by you or your employees.
  • Claims that predate your policy: This refers to pre-existing situations.
  • Subsidiary Expenses: You cannot write off expenses that were incurred by other companies or independent contractors, as the policy will only cover your company.
  • Claims Resulting From Criminal Action: If you or your employees are found to have done anything illegal, the financial consequences may not be covered.
  • Third-Party Causes: If the incident resulted from the activities of a third-party company with whom you do business, it probably won’t be covered.


Cyber liability insurance can be a complex matter, but the basic idea is very simple. These policies are meant to give you an extra helping hand in the event of a successful cyber attack against your organization. As we said before, every policy is different, and yours should be no exception. Every company does things in its own specific way, and any policies they purchase should be able to work within that framework. Without customized plans, this would not be possible.

At PCH Technologies, we understand that these matters can be difficult to understand. That is why we always try our best to help our customers with the expert advice that only a true expert can provide. We have been proudly serving the public for many years, and we can help you to find a cyber insurance policy that is right for you. For more information call PCH Technologies at (856) 754-7500.