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Cyber Liability: Why Basic Policies Don’t Cut It

Posted by Steve Babcock on Oct 8, 2025 11:00:00 AM

In today's world, digital technology has become huge; this means every business could be in danger of facing cyber risks. Cyber incidents can cost up to thousands, possibly even millions, in recovery, as well as causing major reputation damage. Many companies don’t realize the damage that a cyber-attack could cause.  

What Is Cyber Liability Insurance? 

Cyber liability insurance was created to cover financial losses and provide costs that result from cyber incidents such as data breaches, ransomware attacks, and network outages. Coverage for these incidents often includes expenses for data recovery and system repair, customer notification and credit monitoring, legal defense and regulatory fines, and PR efforts to restore customer trust. Some general liability or business owner policies might include some type of limited cyber coverage, but it’s usually not enough. Those basic policies were set to handle any physical risks, not potential digital ones.  

Why Basic Policies Don’t Always Cut It: 

Traditional business insurance doesn’t focus on cybersecurity as much as it does for damages, theft, or injuries. Cybersecurity often falls into a gray area of coverage. General liability insurance might not cover customer data leaks or data breach attacks. A property policy might exclude electronic data, even if destroyed by malware. Lastly, a crime policy might only protect against physical theft, not any stolen digital funds. This gray area in protection may leave a company paying out-of-pocket for very costly data recovery and lawsuits.  

The Bottom Line: 

Smaller companies may be more at risk of becoming a prime target for hackers because they often have weaker security. An email scam or ransomware attack could shut down a company's operations for days. Having cyber liability coverage can help with recovery costs, ransom payments, and business interruption losses. Cyber risks aren’t going away, they’ll become more common with the rise of digital technology. Every company that uses any type of technology, stores data, or connects to the internet is exposed to cyber risks. Basic insurance policies will not protect companies against cyber threats that can lead to damage to their finances, customer trust, and reputation. Looking into a customized cyber liability insurance policy will ensure that your company is protected, can recover quickly, and continue to operate as normal after an attack. For more information, check out our website.