Cyber Insurance Guide
· Updated December 20, 2024 · 5 min read

Cyber Insurance vs. General Liability: What’s the Difference?

❓ COMMON QUESTION
One of the most common questions we get: "Doesn't my general liability policy cover cyber attacks?"
NO
Short Answer
General liability specifically excludes cyber risks
Longer Answer

General liability specifically excludes cyber and technology risks, leaving a massive gap in your business protection. Here’s what you need to know.

🚨 The Coverage Gap That Could Kill Your Business

⚠️ What General Liability DOESN'T Cover
🔓 Data breaches
Customer information stolen or exposed
🔒 Ransomware attacks
System encryption and extortion demands
📧 Business email compromise
Fraudulent wire transfers
⏱️ System downtime
Lost income from cyber incidents
👥 Privacy lawsuits
Customer claims over data misuse
📋 Regulatory fines
Government penalties for data breaches
🤔 Why the exclusion?
Insurance companies learned the hard way that cyber risks are fundamentally different from traditional liability risks. They're more frequent, more expensive, and require specialized expertise to handle.

⚖️ Side-by-Side Comparison

Scenario
General Liability
Cyber Insurance
Customer slips in your store
✅
➖
Product defect causes injury
✅
➖
🔒 Ransomware encrypts your files
❌
✅
🔓 Customer data stolen in breach
❌
✅
📧 Email hack leads to wire fraud
❌
✅
⏱️ Website goes down, lose sales
❌
✅
👥 Privacy lawsuit from breach
❌
✅
📋 Government fines for data breach
❌
✅

📊 Real-World Examples

🦷 Case 1: The Dental Practice
What happened:
Ransomware attack encrypted patient records
General liability claim:
Denied - "cyber event exclusion"
Out-of-pocket costs:
$85,000
With cyber insurance:
Would have been covered (minus deductible)
⚖️ Case 2: The Accounting Firm
What happened:
Client sued over data breach exposure
General liability claim:
Denied - "failure to protect electronic data"
Legal defense costs:
$45,000
With cyber insurance:
Legal defense fully covered
🍕 Case 3: The Restaurant
What happened:
POS system hacked, credit card data stolen
General liability claim:
Denied - "electronic data exclusion"
PCI fines and costs:
$125,000
With cyber insurance:
PCI fines and investigation covered
**With cyber insurance**: All costs covered under privacy liability

What Each Policy Actually Covers

General Liability Insurance

Purpose: Traditional business risks

  • Bodily injury on your premises
  • Property damage you cause
  • Product liability claims
  • Advertising injury (but not cyber-related)
  • Professional mistakes (if professional liability included)

Cyber Liability Insurance

Purpose: Digital age business risks

  • Data breaches and privacy violations
  • Ransomware and system attacks
  • Business email compromise
  • System downtime and recovery
  • Regulatory investigations and fines
  • Privacy-related lawsuits

The “Technology Errors & Omissions” Confusion

Some general liability policies offer “Technology E&O” as an add-on. Be careful - this is usually very limited coverage that:

❌ Doesn’t cover ransomware or data breaches ❌ Doesn’t cover business interruption from cyber events
❌ Doesn’t include incident response services ❌ Has low limits compared to standalone cyber policies

Bottom line: Technology E&O is better than nothing, but it’s not a substitute for proper cyber insurance.

Cost Comparison Reality Check

General Liability: $500-$1,500 annually for most small businesses Cyber Insurance: $800-$3,000 annually for most small businesses

The math:

  • Cyber insurance costs roughly 2x general liability
  • Average cyber claim costs $4.4 million
  • Average general liability claim costs $15,000

Which risk would you rather be uninsured for?

Do You Need Both?

Yes, absolutely. Here’s why:

🏢 Physical World Risks

General liability covers traditional business risks that still exist - customer injuries, property damage, product issues.

💻 Digital World Risks

Cyber insurance covers modern business risks - data breaches, ransomware, online fraud, system failures.

📋 Regulatory Requirements

Some industries require general liability. Others increasingly require cyber insurance. You may need both for compliance.

🛡️ Complete Protection

Together, they cover the full spectrum of modern business risks - physical and digital.

Common Myths Debunked

Myth 1: “I’m too small to be targeted”

Reality: 43% of cyber attacks target small businesses. Criminals prefer smaller targets with weaker defenses.

Myth 2: “My IT guy handles security”

Reality: Even the best IT can’t prevent every attack. Insurance handles the aftermath when prevention fails.

Myth 3: “General liability is more important”

Reality: Cyber claims are typically 10-100x more expensive than general liability claims.

Myth 4: “I’ll add cyber coverage later”

Reality: You can’t buy cyber insurance while under attack. Get coverage before you need it.

Shopping Smart: What to Look For

In General Liability

  • Standard bodily injury and property damage
  • Professional liability if applicable
  • Confirm cyber risks are excluded (they should be)

In Cyber Insurance

  • First-party coverage for your own losses
  • Third-party coverage for customer claims
  • Incident response services included
  • Adequate limits for your industry and data exposure

Bundling Considerations

  • Some insurers offer “package” policies with both coverages
  • Can be convenient but compare to standalone policies
  • Make sure cyber coverage isn’t watered down in packages

The Bottom Line

General liability and cyber insurance aren’t competing products - they’re complementary. One covers traditional business risks, the other covers modern digital risks.

In 2025, running a business without both is like driving a car with only front brakes. You might be fine on straight roads, but when you need to stop quickly, you’re going to have a problem.

Action Steps:

  1. Review your general liability policy - confirm it excludes cyber risks
  2. Assess your cyber exposure - what data do you store and systems do you rely on?
  3. Get quotes for both - understand the true cost of complete protection
  4. Don’t choose between them - get both coverages from carriers you trust

Need help finding the right cyber coverage? Our state and industry guides provide targeted recommendations for your specific situation.

Want to understand what cyber insurance actually covers? Check out our real claims stories to see how coverage responds to different scenarios.