What Is Cyber Liability Insurance?
Cyber liability insurance is designed to protect business owners by providing comprehensive data security coverage, breach response services, and claims handling backed by a team of legal, forensic and crisis management experts. It is one of the most significant ways you can protect your business from cyber crime and cyber liabilities in general.
Let’s say, for instance, a restaurant owner promotes an event and accidentally uses copyrighted images without obtaining the appropriate permission or license in their promotional materials. The owner of those images sends a cease-and-desist letter to the restaurant owner, demanding compensatory damages as well as the removal of the image from all promotional materials. Such copyright infringement penalties can take a large toll, particularly on small businesses — but cyber liability insurance may cover the cost of damages as well as the costs to defend the claim.
Common Cyber Liabilities
Here are some common liabilities that small businesses face:
- Data Breach
IBM’s 2025 report states that the global average cost of a data breach was $4.44 million, while the U.S. average reached $10.22 million. While we tend to read about large data breaches in the news, small and midsized businesses can be particularly vulnerable to cyber incidents because they may have fewer cybersecurity resources and controls than larger organizations.
- Copyright Infringement
Copyright infringement can occur unintentionally, such as when a business uses an image found online without obtaining appropriate permission. Approximately 7,933 private copyright cases were filed in U.S. federal district courts during fiscal year 2025. In addition, 37% of claims filed with the U.S. Copyright Office’s Copyright Claims Board involved visual works, including photographs. Depending on the circumstances, statutory damages may range from $750 to $30,000 per infringed work and may reach up to $150,000 per work when infringement is found to be willful.
https://www.uscourts.gov/sites/default/files/document/jff_4.7_0930.2025.pdf
https://www.copyright.gov/reports/annual/2025/ar2025.pdf
- Ransomware Infections
Ransomware is malicious software designed to restrict access to systems or data, often until a ransom is demanded. According to Verizon’s 2025 Data Breach Investigations Report, ransomware was present in 44% of the breaches reviewed, and the median ransom payment was $115,000.
- Phishing and Social Engineering
Phishing remains one of the most commonly reported forms of internet crime. The FBI received 191,561 phishing and spoofing complaints in 2025. Businesses should regularly educate employees on identifying suspicious emails, links, attachments and requests for credentials or payments.
How to Mitigate Cyber Liabilities
- Implement Security and Educate Employees
Protecting a business requires more than traditional antivirus software and a firewall. Organizations should take a layered approach to cybersecurity and regularly educate employees about phishing, suspicious emails and links, social-engineering attempts and appropriate steps to take following a suspected cyber incident.
At a minimum, businesses should consider implementing:
- Endpoint Detection and Response (EDR) on supported computers, servers and other endpoints.
- Multifactor authentication (MFA) for email, remote access, cloud applications, administrator accounts and systems containing sensitive information. Phishing-resistant MFA should be used when available.
- Secure remote access. Remote Desktop Protocol (RDP) and similar services should not be directly exposed to the internet. When remote access is necessary, it should be protected through secure access controls such as a VPN or zero-trust gateway with MFA.
- Properly configured firewalls and secure Wi-Fi networks.
- Prompt security patching for operating systems, applications, firmware and internet-facing devices.
- Regular, protected backups of critical systems and data, including at least one backup isolated from the primary network, with restoration procedures tested periodically.
- Email security and phishing protections, supported by recurring cybersecurity training.
- Strong, unique passwords and an approved password manager.
- Least-privilege access, limiting employees and vendors to only the systems and information necessary to perform their duties.
These safeguards should be reviewed regularly and adjusted to reflect the organization’s operations, technology and cyber risk.
https://www.nist.gov/itl/smallbusinesscyber/cybersecurity-basics
https://www.cisa.gov/audiences/small-and-medium-businesses/secure-your-business/smb-resources
- Understand Copyright Laws and Use Properly Licensed Content
Be sure to educate all employees on the dangers of copyright infringement when it comes to creating and distributing promotional materials or updating your website. There are many ways to acquire quality images and video clips for marketing purposes either for free or for a relatively low cost. Here are just a few suggestions:
Properly Licensed Content & Design Tools
Low-Cost Images
Music: Playing copyrighted music for customers may constitute a public performance requiring appropriate licensing. This can include background music, live bands, DJs and karaoke. Restaurant and bar owners should not assume that a performer or entertainment vendor has obtained all licenses required for the establishment.
Personal streaming subscriptions may also be inappropriate for commercial use. For example, Spotify states that its standard service is limited to personal, noncommercial use. Businesses should use an authorized commercial music service and confirm that the applicable licenses cover how music will be used in the establishment.
https://www.bmi.com/licensing/entry/bars_and_restaurants
Photos and graphics: Photographs found through internet searches, review sites or social-media accounts should not be treated as free for commercial use. The U.S. Copyright Office explains that the photographer generally owns the copyright and that permission is ordinarily required before another party may reproduce or publicly display the photograph online. A business should not assume that appearing in a photograph or crediting the photographer provides permission to use the image commercially.
Restaurants and bars should:
- Use original photographs or images obtained from reputable licensed sources.
- Retain copies of licenses, receipts and written permissions.
- Obtain written terms from photographers, marketing agencies and influencers explaining who owns the content and how the business may use it.
- Obtain permission before reposting customer or employee photos for advertising purposes.
- Periodically review websites, menus, event flyers and social-media accounts for unlicensed content.
- Notify their insurer and consult appropriate counsel upon receiving a copyright demand or infringement notice.
https://www.copyright.gov/policy/CASE-study/
- Get Comprehensive Cyber Liability Insurance
Cyber liability insurance can provide an important additional layer of financial protection when combined with appropriate cybersecurity and risk-management practices. As businesses increasingly rely on credit card and digital payments, delivery platforms, mobile and online ordering, cloud applications, and other connected technologies, they may collect or process significant amounts of customer and business information. A cyber incident involving that information can result in significant financial, operational, and reputational consequences.
Business owners should consider whether cyber liability coverage is appropriate for their operations and discuss available coverage with their insurance agent.
