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  • Writer's picturePauline Handy

Cyber Bytes: What Is Cyber Liability Insurance?

Updated: Aug 28, 2023

Cyber liability insurance won’t prevent a hack, but it will help you recover from one. View these two main types below.

Green cyber umbrella on computer screen
  • First-party coverage, which responds to a loss resulting from a cyberattack on your business network

  • Third-party coverage, which responds to cyberattacks on others’ systems or networks

Here’s a basic breakdown of coverage in a cyber liability policy.

Client notification: States have data breach notification laws that require companies to tell clients about a breach.

Free credit monitoring: Services can cost $10 to $30 per month per individual. Most states require businesses to provide it for a year.

State and federal penalties: You might be fined if you are found liable for a breach.

Legal defense costs: You’ll need to mount a defense if a client sues you for exposing their data.

Cost to repair damages: You’ll need tech expertise to rebuild your computer systems and networks.

Loss of transferred funds: You’ll want reimbursement for any money lost to a transfer of funds scheme.

Ransom negotiations: An expert can help by removing emotions from the process and negotiating a payment reduction.

Ransom payments: Some policies reimburse ransom payments, but the conversation around ransom payments is changing. Make sure you understand the exclusions.

Business interruption: A cyberattack can put a halt to your business operations. You’ll need time for digital restoration, and business income replacement provides a lifeline.

Digital forensics: A digital forensics investigator identifies how a data breach occurred. They help establish liability, and findings often provide a blueprint for preventing future hacks.

Public relations: A public relations specialist can help rebuild your business reputation after a nasty hack.

Data breach due to stolen property: Cyber liability won’t cover the cost to replace a laptop or other device (that’s property insurance), but it will respond to the data exposed due to the theft.

Technology errors and omissions (Tech E&O): A company can sue its consultants, freelancers or service providers for causing a data vulnerability. If you access companies’ networks as part of your job, Tech E&O can protect you against cyber liability.

You can’t outsource your liability

Even if you use cloud-based software hosted by another company, it doesn’t relieve your liability. You could be named in a lawsuit or required to provide free credit monitoring services to your customers. Depending on the severity of the breach, a vendor’s insurance limits might not be enough to cover their clients.


  • Implement cybersecurity measures (train employees, use multifactor authentication, update your software and require strong passwords).

  • Evaluate your vendors’ and partners’ cyber liability insurance and protection protocols.

  • Create a cybersecurity and data breach response plan, including insurance.

Reach out to an insurance professional at V.F. McNeil Insurance if you have questions about cyber liability insurance. Request an appointment or call today at (203) 481-2684. They'll have the answers and the protection you need for cyber risks and any of your other business insurance needs in Connecticut.


The right insurance from day one®

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