Who Needs Cyber Liability Insurance?

Cyber insurance is not a legal requirement, but given the dependence we now have on computer systems and data, many businesses need cyber liability insurance.  This is particularly true for a business that handles private customer data, especially payment details, or that relies on computer systems to trade. Businesses are also at risk if they have many computers linked to an internal private network.

However, despite the average cybersecurity breach costing large businesses £22,700 and small traders £3,650, most businesses are still are not insuring themselves against cyberattacks. In fact, according to the UK Government’s Cyber Security Breaches Survey 2021, only 43% of businesses and 29% of charities have taken out some form of the cyber insurance policy.

A simple policy is sufficient for many small businesses, and the cover is getting easier to buy. And the benefits can be surprising. Many business owners who do have bespoke cyber insurance report using expert legal advice as well as IT specialists provided by the insurance after an attack, as well as receiving general advice on their cybersecurity. Businesses big and small can use cyber insurance as a sort of unofficial accreditation to show their reputation is one to be trusted. This is especially true were sensitive client information is held by a business or where trading is dependent upon computer systems.

Cyber insurance providers

There are two main types of cyber insurance providers for getting cyber insurance quotes in the UK: direct insurers and brokers. Both have their pros and cons.

Using a direct insurer like Hiscox, Direct Line, and AXA can be cost-efficient as there aren’t any broker fees to pay. Small or low-risk businesses might find these products are sufficient for their cyber insurance needs. These insurers have their own sales teams who will work directly with a customer. But at the end of the day, these agents work for the insurer, not the customer.

For businesses with more complicated cyber risks, a specialist broker might be required. Brokers may work with multiple providers to be able to cherry-pick the best coverage for their client. Brokers charge fees, but they work for the client.

Brokers are market experts who can provide a more ‘personal’ approach to the insurance market to offer advice and answer any questions. The ABI’ find a broker’ service can be useful for finding a broker.

While aggregators (comparison engines) are typically useful for getting access to multiple potentially suitable providers, cyber insurance is not widely available from comparison sites at this point in time.

Finally, a quick Google search for ‘cyber insurance provider’, ‘cyber insurance broker’ or ‘cyber insurance comparison site’ should pull up a range of options.

Cyber insurance policy wording

Before buying a policy, be sure to read through the policy wording. This will spell out exactly what is covered by the policy and alert you to any exclusions or not covered issues. For example, a policy might not cover lost income as a result of a cybersecurity event or ransom requests.

Sometimes, you can find the policy wording online, for example, by Googling the provider’s name and ‘cyber insurance policy wording’.

What is cyber liability insurance?

Cyber insurance is a dedicated business insurance package to protect against cybercrime and, potentially, IT system failures. It is designed for businesses with large and complex computer networks or that hold lots of sensitive data or deal with customer payment details.

The insurance covers many disaster scenarios such as hacking, viruses, theft of data and more. It provides businesses with expert help and advice, both on the legal side and the IT side, as well as covering what could be expensive payments to affected customers. It may also cover ransom demands.

Additionally, cyber liability insurance can also provide practical solutions outside of the business, such as a public relations campaign to improve reputation after a cybersecurity event or even setting up a call centre to deal with customer complaints in the case of a large event.