What Does Cyber Insurance Not Cover?

Cyber insurance was developed to protect businesses from monetary damages resulting from cybercrime and hacking. Because the idea of a standard policy is so new, the coverage it provides is continually evolving. However, most insurance policies won’t pay for everything.



Cyber liability insurance shields businesses from the financial fallout of cyberattacks and data breaches. This will pay for remediation costs and legal defense in the case of a claim arising from the data breach.

Both first- and third-party claims are often covered by cyber insurance policies. First-party coverage pays for the expenses your business incurs as a direct result of the data breach or security incident, while third-party coverage pays for damages or settlements you suffer as a result of claims filed against your organization after the fact.

Every business that deals with customer data, not only IT businesses, needs cyber liability insurance. Due to a lack of dedicated IT security personnel, small businesses are often easier targets for cybercriminals.

Things Cyber Insurance Does Not Cover!

Things Cyber Insurance Does Not Cover

Sales Losses

Most cyber insurance policies will cover operating losses, such as payroll, in the event of a company disruption, but many cyber plans do not cover lost profits. In addition, there may be a waiting period before damages are covered under some business interruption insurance plans. One to twelve hours is a possible wait time.

Bodily Injury and Property Damage

These days, you might be vulnerable to cyberattacks everywhere, not just online. As more objects that might injure people or destroy property are connected to the internet, the potential for real repercussions increases significantly. A cyberattack on a manufacturing firm, for instance, might destroy a part of the supply chain, resulting in tainted products that could make consumers sick or defective items that could result in property damage.

With computers controlling everything from the elevators to the life support systems, the potential ramifications of an attack on a hospital are terrifying. Most cyber policies do not cover damages of this nature, therefore a company will need to rely on its other business insurance.

Software and Hardware

Cyber insurance often does not cover property loss, including the commonly damaged computers and other technological equipment. This might be a problem if the hardware is beyond repair or if replacing it would be more cost-effective. Cyber insurance typically only restores a company’s software to its pre-attack form, leaving the business on the hook for depreciation costs.

Missing Equipment

If an employee loses a company laptop or other mobile device containing sensitive company data, the company may not be covered for any resulting cybercrime. It is critical to ensure that adequate security is established on all devices because this exclusion may not always hold true if the device is encrypted.

Third Parties

If a company’s cloud service provider, email provider, web server, or any other vital internet link is attacked, it might have a domino effect on the company itself. Oftentimes, cyber insurance will not protect you if you use a third-party service provider.

Business Reputation Damage

It may be difficult to quantify the amount of damage a cyber attack brings to a company’s reputation, but this does not make the matter any less serious. Reputational injury and the cost of repairing it are typically not covered by insurance policies.

As the risk of cyberattacks grows, so does the sophistication of cyber insurance. Businesses need to know the ins and outs of their insurance policies in case the worst happens.



Cyber liability insurance can assist cover the many expenses that may arise as a result of a data breach.

Typical first-party protections include:

Restoration of lost data: Covers the cost of restoring files that were compromised.

crisis management: Helps cover the cost of crisis management efforts including hiring a public relations expert, an attorney, or a forensic accountant.

Loss of income: Payments made if business income is lost as a result of a temporary shutdown caused by cyberattacks.

Extortion: Helps defray the cost of settling extortion demands made by hackers who have stolen your business’s data.

Notification: Costs associated with informing anyone who may be affected by a data breach are covered under this policy.

Cyber liability insurance is commonly used by businesses to pay for settlements, legal fees, and other legal expenses incurred as a result of claims made by third parties. Cyber insurance may provide protection against lawsuits such as those involving negligence, errors and omissions, defamation, invasion of privacy, and more.



There are several factors that influence the cost of cyber liability insurance, including:

  • Constraints on insurance
  • just how many employees may view internal company documents
  • Precautions for safety (e.g. antivirus software)
  • Claims history
  • Industry

A cyber liability insurance agent from KSA Insurance will assist you in finding the best policy for your company at an affordable rate.

Information about Linked Risk Solutions

Information about Linked Risk Solutions

Here at Linked Risk Solutions, we provide our agency partners with innovative, market-leading options for comprehensive insurance and risk management. Our team possesses a wealth of knowledge in the fields of managed care E&O and cyber liability, management and professional liability, captive management, and risk management, and we also have deep market connections and years of expertise in the field as a whole.

We put in long hours to develop unique solutions that no other wholesaler can match, and we help our agency partners ensure that their customers may expand their businesses without risk. In addition, you may consult our insurance coverage manual for EFTs.