As a small business retailer, if someone told you that you needed to protect your business, your mind would likely venture to a number of different tasks. You’d think about ensuring you had the right alarm system installed, or whether your insurance would cover you in the event of a natural disaster— these are the essential protections that most retailers are aware that they need.

There is, however, something missed from this list of considerations: cyber liability insurance. Cyber liability insurance is a relatively new insurance product and, as a result, is not an area that many small retailers prioritize. However, as a modern business, this niche insurance product is definitely something you should investigate further and purchase.

What is cyber liability insurance?

First, let’s define what cyber liability insurance actually is. In a nutshell, cyber liability insurance is a form of insurance that protects your business against issues caused by data leaks and data breaches. You’ve likely seen news stories over the past few years that involve big companies, such as Sony and Equifax, suffering data breaches.

When a data breach occurs, it’s incredibly expensive for the business. There are a number of expenses you may suffer in the event of a data breach:

  • Notification expenses. If you discover a data breach, you are required to notify any customers who may have been impacted by the breach.
  • Cyber extortion – Cyber crime involving extortion is becoming more common; i.e. your business data is withheld from you by thieves until you pay a ransom.
  • Legal expenses – In the event of a data breach, customers who have been impacted by the breach have the legal right to sue your business. This can be extremely expensive, especially if you are found liable and required to pay damages.

The costs of the above can be substantial, so cyber liability insurance is a product that protects you for these eventualities. Rather than your business having to suffer through a troublesome leak and dip into existing funds to cover the attached expenses, you can just make a claim on your policy.

Now you know what cyber liability insurance is, here’s why every business needs it.

#1 – All businesses rely on data, making all businesses a target for cyber crime

If you run a brick and mortar store, it’s easy to dismiss the need for cyber liability insurance. Sure, you can see why e-commerce stores might need such an insurance, but you’re a traditional physical store: what cyber information do you have to protect?


  • Transaction processing information – If you process customer transactions by debit or credit card — online or offline — then your business is in possession of information that cyber thieves would dearly like to get their hands on.
  • Customer names – If you use an IT system to record the details of customers then once again, you’re in possession of valuable information to cyber thieves.
  • Contact information – Processing transactions often requires the use of contact information, such as phone numbers and email addresses. If you store this information electronically, then you have a duty of care to ensure it’s stored safely.


The simple truth is that businesses that don’t have some measure of reliance on digital data are all-but-nonexistent in the modern world. Essentially, if you use a computer for any part of your business process, you are inevitably storing valuable information.

This means that all businesses — be they physical businesses or entirely based online — are attractive targets to cyber thieves. When you accept that you’re a target, you also have to accept that you need to protect yourself. Some of these protections are in the form of data security measures, but you also have to protect yourself via insurance, just in case all of your security measures fail.

#2 – The need to reassure customers

In the event of a data breach, you will face many issues. The main issues are practical in nature, but you will also have to deal with the blow such a breach can make to how customers perceive your business. In fact, many businesses see customer perception as one of the biggest problems caused by a data breach, which is why many companies who suffer leaks attempt to keep the leaked secret.

Not only is keeping the leaked secret a bad idea simply for reasons of transparency, it may also violate state law. Even worse still, if the truth eventually does come out, then the reputation of your business is going to be even more damaged by the fact you tried to hide it.

Ultimately, the only way to deal with a data boost — and protect your relationship with your customers — is to CAR: confess and rectify.

However, CAR is expensive to implement, at a time when your business may already be suffering financial hardship; for example, if you have had to pay cyber extortion costs. Cyber liability insurance ensures that you can CAR to the very best of your abilities, right from the moment that you learn there is a problem. While customers will likely be alarmed by the breach, the fact that you chose and implemented an effective CAR solution will definitely go in your favor.

#3 – In the event of a data breach, you need to get back up and running ASAP

Imagine the following, all-too-plausible scenario: your entire business is shut down as a result of cyber extortion. The amount that has been demanded is so high, you literally don’t have the funds to cover it— and you can’t make extra money because the business isn’t able to operate due to the hack.

This scenario can and does, happen, and it’s severe enough to derail even the most successful of businesses. With cyber liability insurance, you can settle a cyber extortion claim and get your store up and running again in the shortest possible time frame. This, alone, is a convincing argument as to the absolute necessity of cyber liability insurance.

In conclusion

While you may not have heard of cyber liability insurance, the above clearly show why such protection is necessary for all kinds of retailers. If you truly want to protect your business against all eventualities, cyber liability insurance should be an integral part of your strategy.