Do You Need Cyber Liability Insurance?

May 7, 2025

117 3 minutes read

Cyber attacks aren’t just a problem for big corporations anymore. Every 39 seconds a cyber attack happens and 60% of small businesses shut down within 6 months of a breach. So, do you actually need cyber liability insurance or is your general business insurance enough? Stick around because in the next few minutes, we’ll break it all down. Why cyber liability insurance matters, what it covers, and whether your business really

needs it. Let’s dive in. Hello business owners. Tia at Trailstone here and today we’re talking about something many business owners are underinsured for, which is cyber liability. I’ve spoken with so many business owners who think this doesn’t apply to them until it’s too late. So just a few months ago, we talked with a business owner who lost $17,000 to social engineering. Their old insurance agent didn’t cover them

properly, so they had to eat the loss. Let’s talk about it. Cyber threats are skyrocketing. Did you know a cyber attack happens every 39 seconds? And 60% of small businesses close within 6 months of a major attack. The average cost of a data breach in the US is over $9 million. And here’s the scary part. Your general business insurance does not cover cyber attacks. That means if a hacker locks you out of your systems or steals customer data, you’re on the hook for all of the damages. But don’t panic. This is exactly why cyber

liability insurance exists. It’s like a safety net for your business in the digital world. So, let’s break it down even further. Why should you invest in cyber liability insurance? Here’s four key reasons. First, cyber insurance covers costs associated with a data breach or a cyber attack. And this includes instant investigations. Notifying affected parties, credit monitoring for impacted customers or legal fees and regulatory fines for non-compliance. Next, a data breach can destroy customer trust and damage your brand’s reputation.

So, cyber coverage often includes public relations and crisis management services to help you navigate the situation and rebuild confidence. Cyber insurance also helps your business recover faster when an issue does arise. It covers data restoration, system repairs, enhanced security measures to prevent future attacks, and keeping your operations running smoothly. Did you know certain industries and regions require businesses to protect customer data? Well, cyber insurance helps you meet these legal requirements and avoid costly penalties. Think of cyber insurance as your digital safety net protecting your finances, reputation, and

business operations. All right, so let’s talk about what cyber liability insurance actually covers. There are two main types of protection. First party coverage protects you and your business directly and it includes data breach investigations, customer notifications, business downtime and any lost revenue and ransomware payments and system recovery. Third party coverage protects your clients and partners if they sue you after a cyber attack. This covers legal fees and regulatory fines, lawsuits from customers whose data was stolen, and

PR and reputation management. It’s like having a digital shield surrounding your business. So now, before you rush out to get cyber insurance, let’s be clear, it doesn’t cover everything. Here are some key exclusions. Criminal charges. So if your company is sued for negligence, that’s on you. Employee fraud. If an employee intentionally leaks data, well then your policy won’t help. and any sort of power or internet outages. So, if your Wi-Fi goes down, cyber insurance won’t foot the bill for that. So, that’s why you need to read the fine print and pick a policy that actually fits your business. Okay, so how do you actually choose the right cyber liability insurance? Well, here’s what to look for. First, assess your risks. Do you handle

customer credit cards or personal info? If yes, then you need coverage. Next, check the exclusions. Make sure important threats like ransomware are covered and consider add-ons. Some policies offer extra protection for fishing scams or social engineering fraud. And also compare your providers. Not all cyber insurance policies are the same, so work with an expert to find the right fit. And remember, the goal is to

minimize risk and maximize protection. You don’t want to be caught off guard here. So, do you need cyber liability insurance? The answer is an absolute yes. If your business one relies on digital data, two stores customer information, three sends money via electronic checks or a four would be financially devastated by a cyber attack. Don’t wait until it’s too late. Protect your business before hackers make you their next target. Trailstone Insurance specializes in cyber insurance and commercial insurance risks. So, if you want help picking the right policy, give us a call or click the link below to get started and I will see you next time.