Beyond Data Breaches: Understanding What Does Cyber Insurance Not Cover?

What does cyber insurance not cover

The purpose of cyber insurance is to provide a safety net for organizations against financial losses brought on by cybercrime and hackers. Standard coverage is still developing because the concept of this kind of policy is still relatively new. Yet, some things are excluded from coverage by the majority of insurance.



Businesses are protected by cyber liability insurance from financial damages brought on by data breaches and cyber security concerns. This covers the expenses needed to recover from the data breach as well as any legal fees in the event that a claim is filed against your company.

Policies for cyber insurance frequently cover first-party and third-party claims. Although third-party coverage pays for damages or settlements you suffer as a consequence of claims brought against your company after the event, first-party coverage covers the costs your firm incurs as a direct result of the data breach or security incident.

Not only computer firms, but every company that handles private information need cyber liability insurance. Particularly small firms are sometimes more at risk from cyber security attacks because they lack the substantial IT staff needed to safeguard their networks.

Things Cyber Insurance Does Not Cover!

Things Cyber Insurance Does Not Cover

Sales Losses

In the case of a business interruption event, the majority of cyber insurance will cover operating losses, such as payroll, but many cyber plans do not cover lost profits. Moreover, business interruption insurance policies sometimes have waiting periods after which damages are compensated. These waiting periods can range from one to twelve hours.

Bodily Injury and Property Damage

Cyber threats these days are not just limited to online settings. The potential for real effects grows considerably as the internet links to more things that might harm people or cause property damage. Using a manufacturing company as an example, a cyber assault might sabotage a step in the supply chain, leading to spoiled goods that could cause sickness or manufacturing flaws that could cause damage. The potential consequences of an attack on a hospital, where computers control everything from the elevators to the life support systems, are horrifying. A corporation must rely on its other business insurance because the majority of cyber plans do not provide coverage for such kinds of losses.

Software and Hardware

Property damage, such as the frequently harmed computers and other technical equipment, is typically not covered by cyber insurance. If the hardware is so damaged that it cannot be repaired or if buying new hardware would be more cost-effective, this might be an issue. In addition, the majority of cyber insurance coverage only returns a company’s software to the state it was in prior to the attack, leaving the corporation responsible for paying depreciation expenses.

Missing Equipment

The fundamentals of cyber liability insurance often do not cover cybercrime that began as a result of a lost business laptop or portable device, depending on the restrictions of the specific policy. This exclusion may not always hold true if the device is encrypted, thus it’s crucial to make sure appropriate security is implemented on all devices.

Third Parties

A cyber assault on a third party used by a company for customer service management, cloud services, email, web hosting, or any important online business connection might have a domino effect on the core firm. Third-party service providers are frequently not covered by cyber insurance.

Business Reputation Damage

Although the harm a cyber assault does to a company’s reputation may be hard to measure, the issue is serious. Most insurance plans don’t pay for reputational harm or the price of correcting it.

Since the severity of the threat from cyberattacks keeps increasing, cyber insurance is also continuing to advance. To fully prepare for the worst case situation, businesses must understand what their coverage covers as well as what it does not.



A data breach can result in a wide range of costs, which cyber liability insurance can help with.

Typical first-party protections include:

Data restoration: Pays the expense of recovering data that was lost as a result of a breach.

Crisis management: Helps pay for crisis management, such as employing a public relations specialist, an attorney, or a forensic accountant.

Loss of income: Pays out in the event that cyberattacks force you to temporarily close your firm.

Extortion: Assists in covering the ransoms paid to hackers who have stolen your company’s data and are now extorting it.

Notification: Pays the expenses involved in notifying all parties who may be impacted by a data breach.

Businesses often use cyber liability insurance to cover costs like settlements, defense fees, and other legal expenditures that come up when a third party makes a claim against them. Negligence, errors and omissions, defamation, invasion of privacy, and other claims may be covered by cyber insurance.



Cyber liability insurance rates vary depending on a number of variables, such as:

  • Limits on coverage
  • how many workers have access to corporate information
  • Security precautions (e.g. antivirus software)
  • History of claims
  • Industry

A KSA Insurance representative will help you to choose a cyber liability insurance coverage that satisfies your business’s requirements while staying within your price range.

Information about Linked Risk Solutions

Information about Linked Risk Solutions

At Linked Risk Solutions, we offer industry-leading, audacious solutions for complete insurance and risk management to our agency partners. In addition to our extensive competence in managed care E&O and cyber liability, management and professional liability, captive management, and risk management, we also have market ties and decades of combined industry experience. We work hard to build original solutions that no other wholesaler can match and to support our agency partners in enabling their clients to continue growing while also being protected from loss. You also check our guide for Electronic Funds Transfer Insurance Coverage.

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