What Does Cyber Insurance Cover? A Plain-English Breakdown

Cyber insurance policy wording is some of the densest in the commercial market. Here's what's actually inside a typical policy, stripped of the jargon.

Most cyber policies split cover into first-party costs, what your own business loses, and third-party liability, claims from customers or others affected by a breach involving your systems.

First-party cover, what typically responds

• Incident response costs, forensic investigation, legal advice, PR support
• Business interruption, lost income while systems are down
• Data recovery and system restoration costs
• Ransomware payments, in some policies, though this is increasingly restricted or excluded
• Cyber extortion costs

Third-party liability, what typically responds

• Claims from customers whose data was compromised
• Regulatory fines and the cost of defending a regulatory investigation, where legally insurable
• Media liability, for claims arising from online content

The questions worth asking before buying

Does the policy cover social engineering fraud, not just technical hacking? Is there a sub-limit specifically on ransomware payments that's lower than your overall cover limit? Does incident response access kick in immediately, or only after a formal claim is accepted? These details matter more than the headline cover figure.

Cover scope varies significantly between insurers. Always read the full policy wording, not just the summary, before buying.