Don’t Get Caught Off Guard: What Cyber Insurance Really Protects Against

In today’s digital world, cyber threats are no longer abstract concerns—they are a daily reality for small businesses. From phishing scams and ransomware to accidental data leaks, the consequences can be financially and reputationally devastating. That’s why more businesses are turning to cyber insurance as a critical part of their cybersecurity strategy.

However, not all cyber insurance policies are created equal. Many small business owners mistakenly assume they’re fully covered, only to discover dangerous gaps after an incident. In this comprehensive guide, Lewis IT walks you through what cyber insurance typically covers, what it doesn’t, and how to choose the right policy to protect your business.

Why Cyber Insurance Is More Essential Than Ever

You don’t need to be a big tech company to become a target. According to the 2023 IBM Cost of a Data Breach Report, 43% of all cyberattacks now hit small and medium-sized businesses. The average cost of a breach for these businesses? A staggering $2.98 million.

Additionally, regulations like GDPR, CCPA, and HIPAA demand that businesses handle customer data responsibly. A good cyber insurance policy can help cover costs after a breach and keep your business compliant.

What Does Cyber Insurance Typically Cover?

Cyber insurance generally falls into two categories: first-party and third-party liability coverage.

First-Party Coverage

This protects your business directly when a cyber event occurs:

• Breach Response Costs: Covers forensic investigations, legal counsel, customer notifications, and credit monitoring.
• Business Interruption: Compensates for income lost due to network downtime.
• Cyber Extortion: Helps pay ransoms, negotiator services, and system recovery.
• Data Restoration: Recovers lost or corrupted data.
• Reputation Management: Covers PR services to rebuild trust with customers and stakeholders.

Third-Party Liability Coverage

This protects you when other parties are affected:

• Privacy Liability: Covers lawsuits and claims if customer data is exposed.
• Regulatory Defense: Pays fines and legal fees associated with non-compliance.
• Media Liability: Covers defamation, copyright infringement, and trade secret leaks.
• Defense & Settlement Costs: Includes attorney fees and court-ordered settlements.

Optional Add-Ons (Riders)

• Social Engineering Fraud: Covers phishing scams and deceptive fund transfers.
• Hardware "Bricking": Pays for damaged devices rendered unusable by malware.
• Technology Errors & Omissions (E&O): Ideal for IT service providers and software developers.

What Cyber Insurance Often Doesn't Cover

Even the best policy has limitations. Be aware of these common exclusions:

1. Negligence or Poor Cyber Hygiene

If your business isn’t following basic security practices (firewalls, MFA, regular updates), your claim could be denied.

Lewis IT can help you strengthen your cybersecurity foundation before applying for insurance.

2. Known Incidents or Vulnerabilities

If a breach began before your policy started or you ignored known issues, your claim may be denied.

3. State-Sponsored Attacks

Many policies exclude "acts of war," including government-backed cyberattacks.

4. Insider Threats

Unless specifically included, damage from malicious employees or contractors may not be covered.

5. Reputational Harm or Future Business Loss

Policies usually don’t cover long-term customer loss or brand damage. Add-on crisis management tools can help fill this gap.

How to Choose the Right Cyber Insurance Policy

Assess Your Risk

Ask yourself:

• What types of data do we store (financial, health, personal)?
• How reliant are we on technology or the cloud?
• Do our vendors have access to our systems?

Lewis IT offers cybersecurity risk assessments to help guide your answers.

Ask the Right Questions

Before you sign anything, ask:

• Does this cover ransomware and social engineering?
• Are legal fees and regulatory penalties included?
• What’s excluded, and under what circumstances?

Consult an Expert

Work with a cybersecurity specialist like Lewis IT who understands the technical and legal language. We can decode your policy, identify gaps, and ensure your coverage fits your business needs.

Understand Your Limits and Deductibles

Choose limits that reflect the potential financial damage of a breach. Select a deductible your business can realistically afford.

Review Renewal Terms

Cyber threats evolve quickly. Ensure your policy adjusts annually to reflect new risks and business growth.

Take Control of Your Cybersecurity Future

Cyber insurance is a smart investment—but only if it’s done right. A poorly selected policy can leave your business exposed when it matters most.

Lewis IT is here to help you:

• Assess your risk profile
• Implement best practices like MFA and employee training
• Choose and manage the right cyber insurance policy

Contact us today and take the first step toward a stronger, more secure future.

Article used with permission from The Technology Press.