Think cyber liability insurance doesn’t apply to your small business? Think again. If you take credit cards, have a website, store customer data, or run any part of your business online, you’re at risk!
Insurance Canopy recently hosted a “clear, no-fear-needed webinar,” Understanding Cyber Liability Insurance for Small Businesses, with host Kyle Porter and industry expert Chris Van Leeuwen. Together, they unpacked what cyber liability insurance actually is, why hackers love targeting small businesses, and what you can do to protect yourself from costly blind spots.
Catch the Replay to Hear From Our In-House Expert
How does cyber liability benefit the side hustlers, gig workers, and small business owners? Check out these key points in the video to learn more:
- 5:00 – Why general liability doesn’t cover cyber risks
- 6:38 – Top causes of data breaches
- 9:01 – Real-world small business claims
- 14:45 – Why platforms like Square may shift liability back to you
- 16:55 – The biggest reasons why hackers love small businesses
- 22:55 – How much cyber coverage costs
- 29:27 – Why policies vary and what to look for in coverage
What Cyber Liability Insurance Actually Is (and Isn’t)
Cyber liability insurance isn’t bundled into your general liability or business owner’s policy. It’s a separate type of coverage designed for today’s digital risks.
Van Leeuwan describes it simply: “Think of it like fire insurance. You hope you’ll never need it, but you’d never go without it.”
Cyber liability insurance can cover:
- Breach response costs, like legal support, forensic investigators, and public relations
- Business interruption, so you’ll be compensated for lost income if you’re shut down
- Ransomware response to help negotiate and cover extortion demands
- Customer notifications and credit monitoring (often required by law)
- Third-party liability if customers or vendors sue after a breach
As Chris Van Leeuwan sums it up: “Cyber insurance is a safety net. It doesn’t stop you from falling, but it makes sure you don’t hit the ground.”
What Cyber Insurance CAN and CAN’T Do for You
Cyber Insurance CAN:
✔️ Pay for legal help, forensic investigators, and PR support after a breach
✔️ Cover lost revenue if your systems go down
✔️ Help negotiate and respond to ransomware demands
✔️ Cover the cost of notifying customers and providing credit monitoring
✔️ Protect you if customers or vendors sue after a data breach
Cyber Insurance CAN’T:
❌ Prevent an attack from happening in the first place
❌ Cover you after the fact (you must have a policy before a breach)
❌ Replace basic security steps like strong passwords and staff training
❌ Make cloud providers or payment platforms fully responsible for your data
❌ Guarantee your reputation won’t take a hit
Who Truly Needs Cyber Insurance?
The short answer: nearly everyone.
Whether you’re an online store, a solo consultant, or a growing brand using apps and cloud tools, you’re exposed. Even businesses that don’t sell online but take digital payments or store customer records can be vulnerable.
Van Leeuwan states, “Hackers aren’t always going after big companies. They’re going after small businesses because they’re easier to breach.”
In Verizon’s 2025 Data Breach Investigations Report, analysts reviewed over 22,000 security incidents and more than 12,000 confirmed breaches — and found that SMBs are increasingly in attackers’ crosshairs.
Why Small Businesses Are Top Targets for Cyberattacks
One of the biggest misconceptions? Thinking you’re too small to be worth a hacker’s time.
Reality check: cybercriminals prefer easy wins. Weak passwords, outdated software, or an employee clicking a bad link are often all it takes.
Chris Van Leeuwan shared real-world stories:
- A bakery was locked out of its POS system for three days due to ransomware
- A consultant with a hacked email account faced $125,000 in forensic costs
- An e-commerce shop was offline for a week after a phishing scam, losing both sales and customer trust
“These businesses didn’t do anything wrong,” Van Leeuwan says. “But they suddenly faced massive interruptions, lost income, and even legal consequences.”
What those stories illustrate, however, is the new norm: in the DBIR’s SMB Snapshot, 88% of breaches at small and medium businesses involved ransomware. That means attackers are not just tricking people, they’re also slipping through unpatched systems, misconfigured devices, or weak edge defenses to leave dangerous malware in your systems (leading to stolen data, customer info, or financial earnings and demanding a ransom in return).
What Risks You May Already Be Exposed To (Without Knowing It)
Even if you don’t store credit card numbers, you probably have customer names, phone numbers, or email addresses. These are all considered personal identifiable information. That’s enough to trigger legal notification requirements after a breach.
Other risks include:
- Phishing and social engineering (94% of claims start this way)
- Ransomware shuts down systems until you pay
- Business email compromise leading to fraudulent transfers
- QR code scams or card skimmers stealing payment data
And don’t assume your platforms (like Square, Stripe, or Google Drive) take full responsibility. Van Leeuwan notes, liability often shifts back to you in the fine print. Cloud providers secure their platforms, but you’re responsible for your business’s use and data.
Most breaches come down to human error, and that’s where insurance and training come in.
How to Choose the Right Policy
Cyber liability isn’t one-size-fits-all. The right policy should be tailored to your business, factoring in things like the size, industry, and level of risk. Key questions to ask include:
- Does it cover both first-party losses (your business) and third-party liability (lawsuits)?
- Are business interruption and ransomware costs included?
- How quickly can you get a certificate of insurance if required for a contract?
Working with a knowledgeable agent can help you avoid paying for unnecessary add-ons (or worse, missing critical protections).
How Much Does Cyber Insurance Cost?
Cyber insurance is not just for Fortune 500 budgets. Van Leeuwan shares that some policies start as low as $850/year for $1M in coverage, with the average around $1,100/year (roughly $90–100/month). Costs depend on your industry and how much sensitive data you handle.
For perspective: the average cost of a small business breach is $255,000. Verizon reported the median price tag of a ransom was $115,000 in 2024. That makes insurance a fraction of what a single incident could cost you.
How to Avoid Major (and Costly) Blind Spots
Small business insurance is essential, but prevention is still step one. Take these practical precautions to protect your business today:
✅ Turn on multi-factor authentication for all accounts
✅ Train employees to spot phishing attempts (some companies even test staff with fake emails!)
✅ Back up data regularly and securely
✅ Use strong, unique passwords with a password manager
✅ Review who has access to sensitive systems
Van Leeuwan emphasizes: “Technology helps, but most breaches start with a human decision. If you train your team, you’re already ahead of the game.”
What to Do If Your Business Suffers a Cyber Breach
If something goes wrong, speed is everything. A cyber liability policy helps you:
- Get legal guidance immediately
- Launch an investigation into the breach
- Handle required customer notifications
- Manage PR and reputation damage
- Cover lost income while you recover
Without coverage, you’re on the hook for these costs (often hundreds of thousands of dollars). That’s why many businesses that experience a cyber breach without insurance go out of business within six months.
Why Cyber Liability Is One of the Most Important Types of Coverage for Modern Small Businesses
You don’t need to be a tech giant to need cyber insurance. If your business uses the internet, you’re exposed.
Cyber liability insurance isn’t about fear; it’s about preparation. It gives you breathing room to recover and keep your business moving forward, even when the unexpected happens.
As Chris Van Leeuwan puts it: “It’s not if, but when. The question is, do you want to carry that risk yourself, or pass it on?”
Common Questions About Cyber Liability Insurance
Does General Liability Cover Cyber Attacks?
No, general liability insurance covers physical risks like property damage or bodily injury. Cyber liability is separate and covers financial harm from digital threats.
What’s Covered By Cyber Insurance?
Cyber liability insurance commonly covers:
- Breach response
- Ransomware negotiation
- Business interruption costs
- Customer notifications
- Credit monitoring
- Third-party lawsuits
What Isn’t Covered by Cyber Liability Insurance?
Cyber insurance won’t cover you for past attacks, prevent attacks, or replace basic security practices. It’s designed to help you recover financially after an incident.
Is My Business Too Small to be a Cyber Target?
No business is too small to be a cyber target! Hackers often prefer small businesses because they’re easier to breach. In fact, 61% of small businesses reported a cyberattack in 2024.
