lock icon over ones and zeros hinting at cyber security

43% of Cyber Attacks Target Small Businesses…

And 60% of those who suffered a cyber attack or data breach go out of business within 6 months, yet 75% of small businesses do not carry Cyber Liability Insurance, according to Small Business Trends.

While almost half of data breaches are intentional, malicious attacks, it’s not all cyber extortion and ransomware like some TV dramas would have you believe. Bad actors often gain access to computer networks because of employee negligence (such as opening an email that contains malware) or by security gaps in third-party applications. And there are other forms of data loss risk – misplaced and stolen devices, software glitches, physical damage to computer systems through fire or flood – that could disrupt your normal business activities and cause a huge financial blow.

mysterious man using a laptop suggesting a hacker

Security and Privacy Breaches: Who Is At Risk?

You should invest in Cyber Liability insurance if your company:

  • Communicates via email, text, social media
  • Accepts credit card or electronic payments
  • Promotes your company via a website or social media
  • Stores company data on a network (such as sales reports, payroll, intellectual property)
  • Stores data that belongs to others (such as employees, customers, tenants, patients)
  • Sell products or services through a website
  • Has employees who remotely access your system

These activities could expose Personally Identifiable Information (PII), such as social security numbers, dates of birth, credit card numbers, usernames, billing addresses, and so on. Even very small companies likely engage in at least one of these activities.

Business owners rate cyber attacks as one of their top concerns, but very few companies have taken basic action to prepare. Learn some best practices for protecting your company from a data breach. Poor password management is one of the most common ways that data is compromised.

Types of Cyber Risk Insurance

Cyber Liability insurance isn’t one-size-fits-all. There are policies covering different aspects of the data protection and recovery process, and you can customize it based on your company’s needs.

Generally, cyber risk insurance covers you on two fronts: lawsuits against you by those whose PII was compromised, and the expenses related to handling the data loss. Those expenses might include:

  • Cost of repairing the system and restoring the data (Network Asset Protection)
  • Cost of forensic investigation, notifying customers, call center support (Breach Support and Crisis Management)
  • Cost to provide credit monitoring for those affected by the breach
  • Regulatory fines and penalties
  • Legal fees
  • Loss of business revenue due to shutdown of computer systems (Business Income and Extra Expense; this is not usually covered by Commercial Property insurance)

Just as a medical office’s computer network differs greatly from that of an auto parts store, so too should their Cyber Liability coverage.

Technology Errors and Omissions Insurance

Though Cyber Liability policies may include some of the same types of coverage, it is not a substitute for Technology Errors and Omissions (Tech E&O) insurance.

Tech E&O is intended for businesses that provide technology-related products and services, and it covers claims made against the business for failures or errors in those products and services.

In contrast Cyber and Privacy Risk policies cover claims made when data has been lost or stolen. Due to rapid changes in technology, this area of insurance is continuously evolving, so please contact us if you’d like to discuss your business’s exposures.

Doesn’t My Commerical General Liability Cover This?

The short answer is no. Most Commercial General Liability (CGL) policies have cyber exclusion clauses in them.

Get a Cyber Liability Insurance Quote!

Most small businesses are concerned about data security but almost none of them allocate any resources towards risk mitigation. It’s not just your business you’re putting at risk, but your employees and customers too! Call Banas & Fickert at 413-527-2700 to speak with an agent about adding a Cyber Liability policy to your CGL or Business Owners policy.

Massachusetts Cyber Insurance FAQs

Cyber Liability Insurance is business insurance designed to help protect a company from financial losses related to cyber attacks, data breaches, ransomware, phishing, malware, and other digital risks. It may help with recovery costs, legal expenses, customer notification, data restoration, and business interruption, depending on the policy.

Yes, small businesses should strongly consider Cyber Liability Insurance if they use email, store customer information, accept electronic payments, use online accounts, or rely on computer systems to operate. Cyber attacks do not only happen to large companies. Small businesses can also be targeted, and recovery costs can be difficult to manage without the right coverage.

Cyber Liability Insurance may help cover costs related to data breaches, ransomware attacks, phishing scams, malware, system recovery, customer notification, legal fees, regulatory issues, and lost income from a covered cyber event. Coverage varies by policy, so it is important to review your options with an insurance agent.

Many Cyber Liability Insurance policies may include coverage for ransomware-related costs, such as system restoration, data recovery, business interruption, cyber extortion response, and professional assistance after an attack. The exact protection depends on the policy terms and limits.

Cyber risks are often not fully covered by a standard commercial general liability policy. General liability insurance usually focuses on bodily injury, property damage, and certain personal or advertising injury claims. Cyber Liability Insurance is designed for digital risks such as data breaches, network attacks, ransomware, and privacy-related losses.

First-party cyber coverage helps pay for your own business’s direct costs after a cyber event, such as data recovery, forensic investigation, customer notification, credit monitoring, and lost income. Third-party cyber coverage helps protect your business if someone else, such as a customer or client, claims they were harmed because of a cyber incident involving your company.

Any business that uses technology should consider Cyber Liability Insurance. This includes contractors, professional offices, retailers, restaurants, medical offices, real estate businesses, nonprofits, consultants, and other companies that store customer information, send invoices, accept payments, or use online systems.

Yes, many cyber policies may help with the cost of notifying affected customers after a data breach. Some policies may also help with credit monitoring, public relations support, legal guidance, and other response costs

Depending on the policy, Cyber Liability Insurance may include business interruption coverage for income lost because of a covered cyber attack or network disruption. This can be important for businesses that depend on computers, websites, payment systems, or digital records to operate.

Common cyber threats include phishing emails, ransomware, malware, stolen passwords, fraudulent payment requests, data breaches, network intrusions, and lost or stolen devices. Many attacks begin with a simple email or login mistake, which is why employee awareness and strong security practices are important.

Businesses can reduce cyber risk by using strong passwords, enabling multi-factor authentication, training employees to recognize suspicious emails, keeping software updated, backing up important data, limiting access to sensitive information, and having a response plan in place. Cyber Liability Insurance can add another layer of financial protection if something still goes wrong.

The right amount depends on the size of your business, the type of information you store, how much you rely on technology, your industry, your revenue, and your potential exposure after a cyber incident. An insurance agent can help review your risk and recommend coverage options that fit your business.