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4 Best Data Breach Insurance Companies for Small Businesses

Think your small business is immune from data breaches and other cybersecurity threats?

Think again.

According to a report in Cybersecurity Magazine, more than three out of five small businesses in the United States were the victim of some type of security breach in the last year. More than four out of five small business owners say they’re not financially prepared to deal with an online attack against their operations. That’s the reason why all small businesses need data breach insurance coverage.

In this article, we’ll cover:

Top 4 providers of data breach insurance protection

The top 4 data breach insurers in the United States are:

  • CoverWallet: Best for comparing several online quotes
  • Embroker: Best for overall online experience
  • THREE: One of the few all-in-one business insurers that offers data breach coverage
  • Travelers: Best for small businesses that want data breach coverage from an industry leader

CoverWallet: Best for comparing several online quotes

CoverWallet is a digital broker specializing in helping small businesses find insurance coverages at an affordable prices by comparing quotes from several companies.

After you complete their quote form, CoverWallet is usually able to pull 2-3 quotes from their partner companies and present to you so that you can select the best and the cheapest one for your companies. In some cases, they might not be able to present the quotes digitally, you might need to call them to discuss your quote options. This is usually because the coverage type or the industry that your company operates in is more complicated and nuanced. And they need additional details from you before getting the final quotes from their partners.

If your goal is to find the cheapest data breach insurance coverage, you might want to start with them. They also earn a good customer satisfaction rating (A) on BBB.

Embroker: Best for overall online experience

Embroker is the first fully digital insurer for small businesses in certain industries. The entire quoting and insurance purchase process typically takes less than ten minutes.

Because Embroker is a digital based company, it’s able to pass on what it saves on infrastructure and unnecessary administration to clients. In most cases, Embroker is able to provide the lowest cost data breach and other insurance in the marketplace. You can also further control your costs by choosing your own policy limits and deductibles.

If you’re concerned about working with a virtual agency, you can rest assured knowing you can reach a business insurance expert over the phone, email or chat 24 / 7. In addition, Embroker assigns an account manager to every policyholder who gets to know the ins and outs of their business and the unique risks it faces.

THREE: One of the few all-in-one business insurers that offers data breach coverage

If you prefer a single source for all your business insurance needs, THREE could be the solution for you. It protects all aspects of a business, including people, property, and operations, in a single comprehensive business insurance policy. It’s one of the few single-stop insurers that offers data breach protection as part of its package.

THREE makes protecting a business easy.

You can also rest assured knowing that THREE is a part of the solid and established Berkshire Hathaway family of companies.

Travelers: Best for small businesses that want data breach coverage from an industry leader

Travelers is a leading provider of small business insurance in the United States. The company has been in business for more than 165 years and is the only property casualty company in the Dow Jones Industrial Average.

Travelers uses the extensive experience of its more than 30,000 employees to help businesses reduce risk, including ones related to data breaches, which typically results in lower premium costs. 

Travelers is known for its:

  • Flexible solutions. It has insurance packages tailored to different industries that can be customized for individual businesses, including their data breach coverages
  • Responsive and reliable service. An experienced professional is always available to answer your questions about business data breach coverage and other types of insurance or to help you with a claim.
  • Innovation. Even though Travelers has been around for a long time, it’s known as a leading innovator in the insurance industry. It was one of the first insurers to cover data breaches.

In the end, Travelers offers quality data breach and other types of protection for businesses in many industries. You owe it to yourself to see if this industry leader could be the right insurer for your business.

What is data breach insurance?

Most business owners are aware of the physical risks faced by the companies they operate, including things like property damage and injuries. Hopefully, they’re finally becoming aware of the virtual risks they need to pay attention to because of their dependence on technology. 

To protect against those risks, businesses should add data breach insurance to their business owners policies (BOPs). Data breach insurance includes a wide range of coverages to help protect businesses from many technology-related risks. Many insurers offer two different types of tech related insurance policies: cyber liability insurance and data breach insurance.

Cyber liability is typically the more comprehensive of the two coverages and it is usually purchased by larger companies. It can be too expensive for many small businesses. While it’s worth looking into, you may be able to get the coverage your smaller operation needs through data breach insurance.

>>MORE: Best Cyber Insurance Companies

Which kinds of small businesses need data breach insurance?

All kinds of small businesses need data breach or cyber insurance. The threats they face may differ, but the risk is present for all of them.

  • Healthcare practices: Medical businesses store a lot of highly personal patient and insurance information. Cyber crooks often hold online files for ransom because they know healthcare businesses will pay a lot to get them released.
  • Retailers. Virtual and real world retailers store a lot of payment data about their customers online. They’re an easy mark for cyber thieves who want to get access to credit and debit card numbers.
  • Lawyers. Legal practices keep very private information about their business and individual clients on their computers and servers. Online criminals steal it to do harm to the clients.
  • Financial firms. Needless to say, companies that store bank account numbers, credit card information, investment data, and more are prime candidates for getting hacked.
  • Researchers. Companies that do scientific research store a lot of reports, data, and secrets online that their competitors would love to get their hands on.
  • Sales organizations. People who work for businesses that focus on sales travel a lot. Their smartphones, laptops and other devices are often stolen when they’re in airports or staying at hotels, then hacked
  • Accountants and bookkeepers. More than any other type of business, number crunchers are entrusted with a lot of their clients’ personal financial information. This makes them a big target for cyber crooks who want to use it to make illegal purchases and transactions.

As you can see, no type of business is immune from cyber crime. That’s why they all need data breach or cyber insurance. 

Why do businesses need data breach coverage?

Hackers target the personally identifiable information (PII) or personal health information (PHI) businesses store on their computers, servers, and other electronic devices. It’s the reason why it’s critical to protect your business with data breach coverage, which can help you respond quickly after a data breach or cyberattack. Some examples of things this insurance covers include:

  • Your company computers are infected by a virus delivered in an email from a hacker that exposes private, sensitive client, employee, and business data.
  • A customer or patient sues you after your business is hacked and their personal or medical information is stolen and used to do harm to them.
  • You have to pay a public relations agency to rebuild the reputation of your business after a data breach.

If you answer YES to any of the following questions, you probably need data breach insurance:

  • Does your business collect, store, send or receive sensitive personal or health-related information?
  • Do you work in an industry that has rules about handling customer data, such as healthcare, education, and finance?
  • Are you unable to cover the costs of responding to and recovering from a cyberattack if one happens to your business today?

Being the victim of a cyber crime is becoming a more real possibility for small businesses every day. The time to protect yourself is now.

What’s the difference between data breach and cyber liability insurance?

The two types of insurance cover different sized businesses. Data breach insurance is a good coverage for small businesses while cyber liability insurance is better for mid-sized and large enterprises. Here’s an overview of each.

What does data breach insurance cover?

This coverage helps you respond to a breach if personal client or employee data, patient health records, or business information becomes compromised or is lost or stolen. Small businesses are covered whether they are the victim of a cyber crime or an employee’s laptop or other electronic device is lost or stolen and then gets hacked.

If your small business becomes a victim of a cyber crime, data breach coverage can help pay to:

  • Notify impacted customers, patients, or employees, which can be costly and is a requirement in most states
  • Offer credit monitoring services to data breach victims, which is also a requirement in many states, so they can find out if they’re compromised information has been used in a financial crime against them
  • Hire a public relations firm to help rehabilitate its reputation.

Extra coverages that can be added to a small business data breach policy include:

  • Business income and extra expense coverage which can help replace lost income if your business can’t operate because of a data breach
  • Prior acts coverage, which covers claims related to a breach that occurred before your policy went into effect and you weren’t aware of it
  • Extortion coverage, which helps cover the amount of ransom you have to pay to retrieve your business data if your company is the victim of a ransomware attack.

A small business insurance expert can advise you on the types and amounts of coverage you need.

What is cyber liability insurance? And what does it cover?

Cyber liability insurance is typically purchased by larger businesses, although more and more mid-sized ones are getting this enhanced level of protection because of the greater threat of larger cyber crimes.

It helps cover financial losses resulting from cyberattacks or other tech-related risks, as well as privacy investigations or lawsuits following an attack. 

Example: If a cyber criminal virtually breaks into your business, locks your computers, threatens to delete your files and demands a ransom, cyber liability insurance can help you respond to the attack, cover the ransom, pay to recover deleted files and replace lost income.

If a business is the victim of a cyberattack, cyber liability insurance can help cover:

  • Legal services to help you meet required state and federal regulations
  • Notification expenses to alert impacted customers, clients, patients, and employees that their personal information was compromised
  • Ransom paid to release locked files in a ransomware attack
  • Lost income because of a computer network outage
  • Costs of lawsuits by customers, patients, or employees because their personal information was compromised
  • Fines from state and federal agencies.

An experienced business insurance agent can help you figure out whether your business qualifies for cyber liability insurance.

What is not covered by data breach or cyber liability insurance?

These two coverages protect against a lot of technology related risks. However, they will not pay for physical damage to — or the theft of — a piece of computer equipment. You will need commercial property insurance to cover that. Data breach or cyber liability insurance will only cover the data related aspects of that theft.

How much does data breach insurance cost?

The cost can vary because it’s based on many factors including:

  • Number of customers, clients, patients, and employees
  • Type of sensitive data and information you store and how you store it
  • Your business industry 
  • Cyber claims history
  • Data protection efforts
  • And more.

Your business insurance agent or a representative at your business insurance company can provide you with a quote. It’s usually a good idea to get multiple quotes from different providers and compare them to find the right coverage at the best possible price.

Does professional liability insurance cover data breach incidents?

Some professional liability insurance policies actually cover data breach incidents; but many don’t. You need to check with your policy and discuss with your insurance company if you want it to be included. The data breach coverage in a professional liability insurance policy is more popular for financial and medical professionals such as tax preparers, financial advisors, or accountants, or doctors and dentists. However, the inclusion is usually not free.

In many cases, the cost of including data breach coverage in a professional liability insurance policy is actually more expensive than having a stand-alone data breach policy. So, you may be better off having your own data breach policy.

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