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Cyber Liability Insurance
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What is cyber liability insurance?

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Cyber liability insurance

When a data breach or cyberattack affects your tech company or your clients, cyber liability insurance can pay for legal expenses, credit monitoring services, and other recovery costs.

Does your tech company need cyber liability insurance?

If hackers steal sensitive information or hold data or services hostage, your business pays the price. In fact, the average cost of a small business data breach is $86,500, according to the internet security firm Kaspersky Labs.

Some small tech companies assume hackers target only large companies. But nearly a third of all cyberattacks hit small and medium-sized businesses. These attacks are often successful, since smaller tech companies are less likely to have a strong defense against hackers.

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Tech companies that purchase a cyber liability policy often handle:

  • Credit card or bank account information
  • Medical information
  • Social Security or driver's license numbers
  • Customer names, email addresses, phone numbers, and addresses
  • Cybersecurity for other businesses

First-party versus third-party cyber liability insurance

You can purchase two types of cyber liability coverage: first-party and third-party.

Many cyber liability insurance policies include both types of coverage. Read more about first-party vs. third-party cyber coverage.

First-party response coverage can cover the cost of:

  • Customer notification
  • Credit monitoring services
  • Anti-fraud protection for customers
  • Security incident investigations
  • Crisis management
  • Insider data breaches
  • Cyberextortion / ransomware costs

Third-party defense and liability coverage can cover the cost of:

  • Attorneys to defend your company
  • Settlement costs (to resolve a lawsuit amicably)
  • Court-ordered damages (if you’re found liable)
  • Miscellaneous court costs

Cyber liability insurance provides vital protection for tech professionals

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Software developers can be held liable for errors that lead to cyberattacks or data breaches. Errors may include faulty code, programs without proper security measures, and compromises that occur because of mistakes they make while working at a client’s office or on a client’s network.

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IT consultants

Unfortunately, IT consultants can be held liable for security breaches even if they didn’t create the IT solution that was compromised. Merely recommending an IT product can make you liable.

If you advise a client to switch to a software as a service (SaaS) solution and the cloud-based data is compromised, a client could blame you.

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Project managers

As a project manager, you can end up taking the blame for mistakes made by others. If a mistake made by a subcontractor leads to a data breach, for example, the client could sue you. When there are multiple people on a project, the risk of a security lapse goes up.

Cyber liability insurance costs

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Tech companies pay about $145 per month for cyber liability insurance. The cost of insurance varies based on:

  • Number of employees
  • Volume and type of data handled
  • Industry risks
  • Policy coverage limits
View Cyber Liability Costs

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