Cyber Insurance Blog

Explaining Cyber Insurance Coverage to Your Clients

Explaining Cyber Insurance Coverage to Your Clients


Female lawyer advises male business client on legal matters concerning a data breach. As the world grows more digitally interconnected, organizations become more susceptible to cyber attacks. Hackers are increasingly targeting small businesses due to their vulnerabilities, with losses reaching nearly $7 billion in 2021. While Cyber Insurance coverage holds much value in mitigating this risk, many organizations are unaware of its importance. According to an industry survey, 61% of small businesses are unfamiliar with Cyber Insurance policies.

As a broker serving your client’s best interests, a part of your duty is to help them understand the value of a Cyber Insurance policy. At ProWriters, we’re dedicated to helping you become the Cyber Insurance expert your clients need. Here’s a guide to help you get started.

What Does Cyber Insurance Cover?

Most business leaders assume that Commercial General Liability (CGL) can protect them against cyber crime. Unfortunately, these policies are not designed to mitigate cyber exposures, so it’s critical to have separate Cyber Insurance. By educating and offering customized insurance, brokers may help organizations manage their cyber risks. In general, Cyber Insurance policies include a wide range of first- and third-party coverages.

First-Party Coverage

This coverage covers response, investigation, and other financial repercussions of cyber crime on an organization’s business activities, such as:

  • Forensic investigation of the cyber attack
  • Notification of customers and other stakeholders
  • Protection services, such as credit monitoring, for affected stakeholders
  • Loss of revenue due to business interruption
  • Data recovery and digital asset damage
  • Payments for ransomware attacks

Third-Party Liability Coverage

Third-party Cyber Insurance coverage protects the policyholder if a third party sues for damages due to a cyber security incident. This coverage is crucial for any organization that handles Personal Identifiable Information (PII) or sensitive client data. It covers the costs arising from claims, such as:

  • Legal expenses associated with third-party claims
  • Fines and penalties issued by Payment Card Industry Data Security Standard (PCI DSS)
  • Regulatory fines from noncompliance with government or industry standards
  • Settlements and court judgments

General liability insurance excludes coverage for data breaches and other cyber crime-related claims and won’t provide in-depth protection to recover from the impact of a cyber attack. If your client handles customer data, you can help them better protect themselves against cyber exposures through Cyber Insurance coverage.

What to Look For in a Cyber Insurance Coverage

Business executives smile during board meeting after deciding to invest in Cyber Insurance.

Companies have various risk profiles depending on their industry, the kind of data they work with, and how they use technology in their operations. As such, some organizations will require more extensive protection than others. A robust Cyber Insurance policy should typically cover the following:

  • Forensic Expenses: This refers to the cost of hiring professionals to investigate and eliminate a cyber threat.
  • Notification Costs: These expenses cover the costs of informing stakeholders of the cyber attack.
  • Reputational Damage: In case of a successful cyber attack, Cyber Insurance coverage handles the costs of hiring a public relations agency to manage reputational damage and maintain stakeholder relationships.
  • Coverage for Cyber Crimes: This covers expenses arising from various types of cyber threats, such as a ransomware or DDoS attack. Depending on the incident, it may cover ransom payments or losses from business interruption.
  • Legal Expenses: Legal costs include defense and settlement costs for defending against claims due to cyber crime.
  • Regulatory Fines and Penalties: If the policyholder is subject to regulations such as PCI DSS, this coverage can cover the cost of fines and penalties.

There is no one-size-fits-all Cyber Insurance coverage for businesses. Brokers are in the best position to help their clients understand their risks and choose the right policy based on their risk profile. When determining what to look for in Cyber Insurance coverage, you can help your clients:

  • Understand Their Risk Levels: The industry, size, and location of the organization affect the likelihood of experiencing a cyber attack. Other risks to assess include dealing with sensitive information, exchanging information with third-party vendors, and maintaining a level of cyber security in the company.
  • Assess Regulatory Responsibilities: Organizations are subject to various privacy regulations and must adhere to privacy acts. While it’s a given for businesses to know their compliances, brokers can help evaluate if their cyber security measures are enough and recommend relevant changes.
  • Work with Their Budget: The amount of Cyber Insurance an organization needs will depend on its exposures. Brokers have connections with the industry’s top carriers and use their network to help clients get a policy that matches their needs and budget.

Help Your Clients Mitigate Their Cyber Exposures with ProWriters

The rising number of cyber crimes makes Cyber Insurance coverage a must in today’s business landscape. Brokers can help businesses mitigate risks by offering Cyber Insurance policies that match their needs. At ProWriters, we are dedicated to helping you accomplish this endeavor.

ProWriters provides brokers with the best resources and tools to give you a competitive edge in the insurance market. Our proprietary Cyber IQ Comparative Rate Platform enables our partner brokers to generate Cyber Insurance quotes from leading carriers in minutes. Our brokers also enjoy the support of experts with decades of experience in the industry. Reach out today to learn more!

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