Cyber Insurance vs E&O Insurance: What’s the Difference?

🔒 Cyber Insurance

Protects against:
• Cyberattacks and data breaches
• Ransomware and malware
• Business interruption from cyber events
• Regulatory fines and penalties
• Crisis management and PR

Trigger: Criminal acts against your business

📋 E&O Insurance

Protects against:
• Professional mistakes and negligence
• Failure to deliver promised services
• Giving bad advice or recommendations
• Missing deadlines or specifications
• Intellectual property violations

Trigger: Your business makes an error

✅ Areas of Overlap

Technology Errors Leading to Data Exposure:
• Software bug exposes customer data
• Misconfigured cloud storage becomes public
• Database error reveals personal information
• Website vulnerability leaks user data

Both policies might respond, but coordination is required

❌ Cyber Insurance Won't Cover

• Giving bad business advice that costs client money
• Missing project deadlines due to poor planning
• Copyright infringement in marketing materials
• Discrimination or harassment claims
• Patent violations in product development
• Professional licensing violations

❌ E&O Insurance Won't Cover

• Ransomware attacks encrypting your systems
• Hackers stealing customer credit card data
• Phishing attacks targeting employees
• Business email compromise fraud
• System downtime from cyber attacks
• Regulatory fines from data breaches

💻 Software Development Company

Cyber Insurance Covers:
• Hackers breach development servers and steal source code
• Ransomware encrypts client project files
• DDoS attack takes down hosted applications

E&O Insurance Covers:
• Software bug causes client's e-commerce site to overcharge customers
• Missing security feature leads to client data breach
• Delayed project delivery costs client a major product launch

⚖️ Legal Practice

Cyber Insurance Covers:
• Email compromise leads to fraudulent wire transfers
• Malware steals confidential client files
• Phishing attack accesses case management system

E&O Insurance Covers:
• Missing statute of limitations deadline
• Giving incorrect legal advice that costs client money
• Conflict of interest not properly disclosed

🏥 Healthcare Practice

Cyber Insurance Covers:
• Ransomware attack on EHR system
• Hacker steals patient records
• Malware spreads through connected medical devices

E&O Insurance (Medical Malpractice) Covers:
• Misdiagnosis due to overlooking symptoms
• Surgical error causing patient harm
• Failure to follow up on test results

📊 Marketing Agency

Cyber Insurance Covers:
• Business email compromise targeting client accounts
• Hackers deface client websites
• Data breach exposes client customer lists

E&O Insurance Covers:
• Ad campaign uses copyrighted images without permission
• Marketing strategy fails to deliver promised ROI
• Social media post creates PR crisis for client

🔒 Cyber Insurance

📋 E&O Insurance

📦 Combined Package

✅ You Definitely Need Both If:

• You provide professional services AND handle client data
• You're in technology/software development
• You're in healthcare, legal, or financial services
• You have professional licensing requirements
• Clients require both types of coverage in contracts

⚠️ Cyber Insurance Priority If:

• You store customer/patient data electronically
• You process credit card payments
• You depend heavily on technology for operations
• You have remote workers or cloud systems
• Your industry is frequently targeted by cybercriminals

⚠️ E&O Insurance Priority If:

• You provide advice or professional services
• Client relationships involve significant financial exposure
• You handle intellectual property or creative work
• Professional licensing boards require coverage
• Your errors could cost clients substantial money

🎯 Strategic Approach

Best practice: Apply simultaneously with same carrier or related companies
Why: Coordinated underwriting prevents coverage gaps and conflicts
Benefit: Clearer policy boundaries and streamlined claims process
Cost advantage: Package discounts typically 15-25% vs. separate policies

📊 Information Coordination

Consistent answers: Technology questions appear on both applications
Risk profile: Present unified view of your business operations
Claims history: Disclose any relevant claims on both applications
Policy limits: Consider complementary coverage amounts

⚖️ Policy Coordination Language

Primary/Excess: Determine which policy responds first to overlapping claims
Exclusion coordination: Ensure no gaps between policy coverage
Claims cooperation: Both insurers work together on complex claims
Defense coordination: Avoid duplicate legal costs on related claims

❌ Assuming cyber insurance covers all technology risks

Software errors that aren't caused by cyberattacks need E&O coverage

❌ Buying from different carriers without coordination

Creates potential coverage gaps and claim coordination issues

❌ Mismatched policy limits

$5M cyber coverage with $1M E&O creates unbalanced protection

❌ Not disclosing one policy to the other carrier

Can void coverage for failure to disclose other insurance

❌ Different policy periods

Creates coverage gaps when policies renew at different times