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Why do cybersecurity companies and consultants need insurance?
Your clients trust you to keep their tech systems safe, but just one mistake could result in a costly lawsuit. Protect your cybersecurity company with insurance policies that cover common liabilities, including legal costs, medical expenses, and repair costs for property damage.
Find the right coverage
Insureon helps cybersecurity consultants find insurance coverage that matches their unique risks.
Get free expert advice and peace of mind knowing you have the right property and liability coverage for your cybersecurity company.
What types of insurance do cybersecurity consulting companies need?
State laws and client contracts may require you to have insurance coverage. These policies cover the most common risks faced by cybersecurity companies and consultants.
Technology errors and omissions insurance
Tech E&O, also called professional liability insurance, is crucial for cybersecurity services. It covers lawsuits related to work performance, such as your advice caused financial harm.
BEST FOR
- Failure to deliver promised services
- Accusations of negligence
- Work errors and oversights
Cyber insurance
If a client suffers a data breach or cyberattack, a cyber insurance policy protects cybersecurity companies from a lawsuit by helping to pay for legal expenses and associated costs.
BEST FOR
- Data breach legal costs
- Client notification expenses
- Fraud monitoring costs
General liability insurance
This policy covers third-party risks every cybersecurity consultant faces, such as accidental damage to a client's laptop. Bundle it with property insurance for savings in a business owner’s policy.
BEST FOR
- Client bodily injuries
- Damaged client property
- Slander and other personal injuries
Fidelity bonds
This bond, also called an employee dishonesty bond, compensates clients if an employee at your cybersecurity startup steals from them. It's often required for client contracts.
BEST FOR
- Employee theft or fraud
- Unlawful data access by an employee
- Illegal fund transfer by an employee
Workers’ compensation insurance
Most states require workers' comp for cybersecurity companies that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Lawsuits from workplace injuries
Commercial auto insurance
This policy covers the cost of an accident involving a vehicle owned by your cybersecurity company. Most states require this coverage for business-owned vehicles.
BEST FOR
- Car accidents
- Vandalism and theft
- Weather damage
Looking for different coverage? See more policies.
How much does insurance cost for cybersecurity companies?
A cybersecurity company with only a few employees will pay less for insurance than a larger business.
Factors that affect cybersecurity insurance premiums during underwriting include:
- Cybersecurity / tech services offered, such as penetration testing or network security
- Business property and equipment
- Business size and annual revenue
- Types of insurance policies purchased
- Policy limits and deductibles
- Number of employees
- Claims history
How do I get insurance for a cybersecurity services company?
It's easy to get cybersecurity business insurance if you have your company information on hand. Our insurance application will ask for basic facts about your business, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurers to find insurance for your cybersecurity company, whether you work independently or hire employees.
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Common questions about cybersecurity services business insurance
Review answers to frequently asked questions (FAQs) about cybersecurity business and security consultant insurance and more.
Why is business insurance important for cybersecurity companies and consultants?
Cybersecurity company owners may think their business is a low-risk operation. However, even a minor lawsuit can still have a serious financial and reputational impact on your business, whether you're just starting your business or are well established.
Here’s a closer look at some key insurance products and why you should carry them:
- Technology errors and omissions insurance, sometimes called tech E&O or tech professional liability insurance, is a bundle of E&O with cyber insurance. This policy can help you with legal fees and court costs if a dissatisfied client sues you over your work performance or third-party cyber incident. It covers the cost of customer notification, credit monitoring, legal fees, and fines.
- Business owner's policy (BOP) combines general liability coverage with commercial property insurance at a discount. It protects against common third-party lawsuits and business property damage.
- Commercial property insurance covers your business property and equipment if it's damaged, lost, or stolen at your fixed business location. Should your machinery or equipment suffer a mechanical or electrical failure, equipment breakdown coverage would provide the funds to repair or replace the damaged equipment.
- Electronic data processing insurance covers electronic devices such as computers, storage devices, and the data they contain during a power surge, fire, natural disaster, or similar incident. Also known as computer coverage or data processing coverage, EDP insurance can help protect your business income against financial losses from data corruption or loss.
- Business income insurance, also known as business interruption coverage, offsets your lost income when your business is forced to close because of a covered peril, such as property damage. These funds help you cover your normal operating expenses until you can resume business operations.
- Employment practices liability insurance (EPLI) safeguards your business if you're sued by an employee over wrongful termination or another violation of employee rights. EPLI can also be added as an endorsement to a general liability or business owner's policy.
- Directors and officers (D&O) insurance protects your board members and officers from legal expenses if they're sued due to a decision they made on behalf of the company that led to a financial loss. D&O is a type of management liability insurance that provides reimbursement for legal costs (indemnification) over lawsuits related to mismanaged funds, employee grievances, failure to comply with regulations, and more.
Are cybersecurity businesses required to have insurance?
In many cases, there are several policies not required by law, however cybersecurity businesses can protect their livelihoods and qualify for contracts and leases by carrying the right insurance coverage. For some cybersecurity companies, workers' compensation and commercial auto insurance may be required.
Typically, cybersecurity providers will apply for general liability insurance first. This policy helps cover common business risks such as customer injuries, damage to a customer’s property, and advertising injuries.
Even small businesses are vulnerable to the same exposures and lawsuits as larger businesses. This is another reason why you should consider cybersecurity business insurance.
In order to accept certain contracts, you may need to have a fidelity bond, which reimburses the client if one of your employees commits fraud, theft, or forgery.
Do cybersecurity professionals need professional indemnity insurance?
Similar to other technology-focused businesses, cybersecurity firms aren't required by law to carry professional indemnity insurance. However, it should be a key component of your risk management plan.
Professional indemnity insurance, also called professional liability insurance or errors and omissions (E&O) insurance, protects you in the event a client files a lawsuit against your cybersecurity company for an error, mistake, or professional negligence.
You can bundle professional liability insurance for cybersecurity businesses with cyber insurance into a technology professional liability policy, which is more commonly referred to as tech E&O. This would be a more affordable insurance option than purchasing the policies individually.
Do I need insurance if I’m a self-employed cybersecurity consultant?
Yes. Self-employed cybersecurity consultants often have the same risks as small businesses. For example, a client could sue you after experiencing a data breach when you had recently installed a security program for them. This single lawsuit could financially devastate your business.
Cybersecurity business insurance coverage protects independent contractors and sole proprietors by paying for costly expenses, such as lawsuits, medical bills (e.g., from carpal tunnel), and property damage. In order to sign a contract, some clients may require you to carry this policy.
What's the difference between first-party and third-party cyber liability insurance?
When buying tech E&O and cyber insurance, you may come across the following terms:
- First-party cyber insurance: Also called data breach insurance, this coverage offers protection against cyber risks at your own business, such as a data breach that exposes your customers' email addresses or other personal information stored by your company.
- Third-party cyber insurance: This covers your responsibility for cyber risks that harm another business. For example, your small business might offer security services to your clients. If a weakness in that security causes your client's data to be exposed, then your security company could be held liable for the breach.
You can typically add first-party cyber coverage to your general liability insurance or business owner's policy (BOP). Third-party cyber coverage is included in tech E&O insurance, which bundles cyber insurance with errors and omissions insurance.
How can I save money on cybersecurity business insurance policies?
There are many steps you can take to get affordable coverage that meets your insurance needs. You can start by comparing free business insurance quotes from leading insurance companies with Insureon.
Our licensed insurance agents can help make sure you get the right, most affordable coverage for your specific needs. Most small businesses can get insured and download a certificate of insurance within hours of applying for quotes.