What Does Cybersecurity Insurance Cover
The most important way to mitigate cyber risk and potential financial losses is to wisely invest in cybersecurity technology and services, implement solid cybersecurity controls, and develop a culture of security within your organization.

Cybersecurity needs to be job number one for your IT team, whether you have an internal department or work with a managed service provider (MSP). It is important to plan for worst-case scenarios to ensure you can protect your business and computer systems.

Many industry experts warn that the likelihood of suffering a cyber attack or other cyber threats is “a case of when, not if.” Therefore, cyber liability insurance should be a critical element in your cyber risk management strategy.

But the main question is what does cybersecurity insurance cover? In this article, we will discuss what cyber crime insurance can cover, what it does not cover, and why it is a necessity for your business.


Find the Right Cyber Liability Insurance Policy For Your Business

Learn what a cybersecurity insurance policy covers with advice from NENS.

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What Is Cyber Insurance?

Cyber liability insurance is a type of business insurance that provides financial resources to react and recover from a cyber event.

The global cyber insurance market is expected to be valued at $20 billion by 2025, 75% of cyber insurance premiums in the US are held by businesses

Cyber liability insurance is a relatively young category in the business insurance industry and there are fewer standards in terms of coverage when compared with more mature traditional insurance products, such as Errors & Omissions coverage.

To select the right cyber insurance policy, it is important to involve a team of experts, including IT or MSP personnel, legal and financial staff, and members of your executive team. No two cyber liability policies are alike. It is important to explore all the details of the coverages, exclusions, and sub limits in your policy.

. This is a strategic purchase, and it pays to shop around and find coverage that meets your unique risks and business needs.


Cyber Insurance: What Does it Cover?

When shopping for cyber liability insurance, it is vital to know what exactly a cyber insurance policy covers. Every policy will be unique, but most will cover claims related to various cyber incidents, including:

  • Data breaches
  • Data loss or theft
  • Denial of service requests
  • Cyber extortion or ransom requests

Cyber crime insurance will cover a variety of different insurance costs, including:


First-Party Coverage

This form of coverage helps you cover the actual costs of the insured in responding to and recovering from a data breach or other cyber incident.

From the moment a breach occurs, the extra costs will start stacking up in the form of extra labor expenses and overtime, as the team scrambles to deal with the fallout of a cyber breach.


Third-Party Coverage

This coverage involves claims by third parties, such as customers or business partners, that may be impacted by the cyber incident.


Incident Response

Incident response is conducted by highly trained, cybersecurity experts who deal with cyber threats, breaches and incidents every day. This is their full-time job.

Incident response teams are fast and deliberate in quickly righting the ship in the immediate hours and days after data breaches occur.



Forensic experts are often needed to root out cyber criminals and remove them from various systems, software and infrastructure after a breach. Again, this is expert-level work and is a vital step in getting a company back to full operations and a secure footing.

Forensics are also important to determine root cause analysis and to understand how the originators of the cyber event breached the company’s defenses to begin with.


Data and Business Recovery

One of the most common forms of cyber attack is a ransomware infection, where those infected are forced to pay a ransom in order to restore access to their systems, data, customer information, and so on.

One of the best ways to recover from a ransomware infection is to leverage your backups and roll back production systems to the moments before the cyber attack occurred.

Even with robust backups, there is often a lot of labor involved in restoring a whole environment from the backups.

what cyber crime insurance covers


Legal Advice

There are a lot of legal issues that need to be handled after a cyber breach, including:

  • Employee communications
  • Client and customer communications
  • Interactions with the cyber criminals themselves
  • Compliance with data breach notification laws and regulations

It pays to have specialized legal advice which is tailored to the needs of a cyber incident.


Business Interruption

This coverage covers the loss of revenue when regular business operations are halted or impaired over a significant period of time.


Public Relations Advice

Depending on the size of your organization or the scope of the breach, there is often negative PR associated with a data breach. The outside assistance of PR experts is useful to properly deal with external stakeholders, such as customers, business partners, and the press.


Notification of Customers and the Provision of Credit Monitoring Services

Again, depending on the size of your organization, a cyber event may cause widespread customer impacts that involve thousands of customers and their personal information.

Notifying customers of a breach can be a massive effort. In addition, it is common that credit monitoring services are offered to victimized consumers after wide scale data breaches.


Cyber Extortion

Ransomware payments often make headlines. But does cyber insurance cover ransom payments? The good news is that it can do. Be aware that many policies are now including sub limits which cap the losses related to ransom payments.

There is a lot of controversy around paying ransoms, since paying cyber criminals for encryption keys, like in ransomware attacks, is perceived as encouraging continued criminal behavior.

At the end of the day, organizations and their carriers must be mindful of laws and regulations prohibiting cooperation with criminal enterprises or state actors.

Ultimately, insurance carriers will work to limit financial damages and in many cases ransom payments may be the most expeditious means of recovering from a widespread attack.


What Cyber Crime Insurance Does Not Cover

There are many circumstances that won’t be covered by cyber liability insurance coverage. These will include losses resulting from riots, wars, terrorism, or civil unrest. Failure to maintain adequate or reasonable cybersecurity measures can also lead to a denial of coverage.

In some cases, prior acts or data breaches occurring before the coverage took effect will also be grounds for coverage denial.

Ultimately, what is covered or not covered is clearly spelled out in the insurance policy. Nearly any kind of loss can be covered, for a cost. The larger the financial risk, the higher the premiums will be.

The good news is, with the right team assembled – including your broker, MSP, and internal experts – it is possible to make a prudent insurance coverage decision after weighing risks, potential impacts, and insurance cost.


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What Does a Cyber Insurance Policy Cover? Find Out With NENS

It goes without saying that having a cyber liability insurance policy is vital as the threat landscape continues to evolve. Without one in place, you could be placing your business, data, and personal information at risk.

Before you begin the policy selection process, let NENS’ cybersecurity specialists provide you with expert guidance. As cyber insurance differs from traditional insurance policies, our team can advise you on how to find coverage that aligns with the needs of your business.

We frequently consult with our clients to help them understand their cyber risk and how to mitigate them with a combination of cybersecurity improvements, policy and procedure enhancements, and cyber liability insurance.

We look forward to helping you explore your risk management needs. For more information on how we can assist you, contact us today to schedule a consultation with our cybersecurity experts.