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Growing Complexity of Cyber Insurance Coverage and Technology E&O Policies

As cyber-attacks become more prevalent, cyber insurance coverage evolves to keep up with this emerging risk. Businesses can purchase cyber coverage in various ways with policies designed for risks of all sizes.

The consequences of a ransomware or data breach event can be expensive and difficult to manage — and with the growing number of cyberattacks, it is important for businesses to purchase cyber insurance coverage of some kind.

Read on to learn more about cyber insurance coverage and tech E&O policies and how they can help protect your business.


Cyber Insurance Coverage and Technology E&O Policies

The most important point to consider when determining whether your business needs cyber insurance coverage or a tech E&O policy is the scope of the business. While both policies are similar in that they provide cyber insurance protection, the policies differ with regard to coverages and covered parties.


Cyber Insurance Coverage

Cyber insurance coverage is critical insurance for any business owner. Even the smallest of businesses can be a target of a cyber-attack like a data breach or ransomware incident. With the cost of the average data breach rising, these attacks are becoming more expensive to recover from, making insurance a necessity for any business. Any business that has or stores client data should consider carrying cyber insurance coverage.

Cyber insurance policies are first-party coverage, protecting the insured business directly from various hazards. While every insurance policy differs, cyber insurance policies generally include some coverage for these risks and costs:

  • Business interruption
  • Legal expenses
  • Liability and defense costs
  • Cyber extortion
  • Fines and other regulatory penalties and fees
  • Forensic investigation costs
  • Notification expenses and costs for public relations management
  • Credit monitoring repair and identity theft services for customers impacted by the breach
  • Data recovery
  • Ransom payments


Customers can purchase cyber insurance coverage in a few different ways. Many major insurance companies offer it as a commercial stand-alone product that a business can purchase to help cover its cyber exposures. Policyholders can also opt to bundle the coverage together with the Business Owner’s Policy (BOP) or Commercial General Liability Policy (CGL) to provide a convenient package policy.


Technology E&O Policies

Another way a business can get coverage for cyber exposures is through a technology E&O policy. While this type of policy does provide some similar coverages as the cyber insurance policy, there is a critical difference.

With a technology E&O policy, the coverage helps to protect a business that provides technology services to clients. This third-party E&O coverage helps provide coverage for errors, mistakes, omissions, and other failures that cause the client to lose money or suffer other damages.

Many technology E&O policies add third-party cyber liability insurance to the E&O coverage to create a bundle. Third-party cyber insurance helps protect technology companies from the costs when they are sued by a client who suffers a data breach or ransomware attack. The third-party policy can help cover legal costs, settlements, judgments, and other fees if your client suffers because of work your firm performed.


Managing the Growing Complexity of Cyber Insurance Coverage

As the need for more specific cyber products continues to grow, we can expect to see coverage evolve. Insurers may introduce new policies or updated wording to address the changing and emerging risks. And as the market and products change, the American Agents Alliance can help you stay up to date and informed.

Being a member of the American Agents Alliance means access to the best education around through our blogs and annual conference. And our members can network with each other and find experts within our membership to help with any challenge. Become a member today and see how we can help empower you to thrive.

You can also purchase your own E&O coverage through the American Agents Alliance. Members can check out our coverage details and get a free quote today.

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