Do You Need Cyber Insurance If You Have General Liability?

In 2023, the average cost of a data breach in Ireland reached €3.2 million. While many Irish SMEs rightly invest in general liability insurance to protect against common business risks, a critical question often arises: does this cover the escalating threat of cyberattacks? The answer, for most, is a resounding no. Relying solely on general liability for cyber incidents leaves significant gaps in your protection, potentially exposing your business to devastating financial and reputational damage. Understanding the distinction between cyber insurance vs general liability is not just about policy wording; it's about safeguarding your future in an increasingly digital world.

The Fundamental Difference: What Each Policy Covers

General liability insurance, often called Commercial General Liability (CGL), is designed to protect your business from claims of bodily injury or property damage to third parties. Think slips and falls on your premises, or damage caused by your operations to a client's property. It's a foundational layer of protection for traditional business risks.

Cyber insurance, on the other hand, is a specialised policy crafted specifically to address the unique and evolving risks associated with cyberattacks and data breaches. It covers the financial fallout from incidents like ransomware, phishing attacks, data theft, and system interruptions. These are risks that simply didn't exist in the same form when general liability policies were first conceived.

Consider a scenario: An employee at your Irish SME accidentally clicks on a phishing link, leading to a ransomware attack that encrypts your entire network. Your operations grind to a halt, customer data is compromised, and you face demands for a ransom payment. Would your general liability policy step in? Almost certainly not. This is precisely where dedicated cyber coverage becomes indispensable.

Why General Liability Falls Short for Cyber Incidents

While some older general liability policies might contain ambiguous wording that could be interpreted to cover certain digital risks, modern policies are increasingly explicit in their exclusions. Insurers have adapted to the cyber threat landscape by carving out cyber-related risks, making it clear that these are not covered under standard CGL. Here are key areas where general liability typically fails:

• Data Breach Costs: General liability does not cover the expenses associated with a data breach, such as forensic investigation, legal fees, notification costs to affected individuals (a requirement under GDPR, enforced by the Data Protection Commission in Ireland), credit monitoring services, and public relations to manage reputational damage.
• Ransomware and Extortion: The costs of ransomware payments, negotiation with attackers, and system restoration are not covered by general liability. These can be astronomical, often forcing businesses into difficult decisions.
• business interruption: If a cyberattack halts your operations, leading to lost revenue, general liability will not compensate you for this business interruption. Cyber insurance, however, often includes coverage for this critical aspect.
• Regulatory Fines and Penalties: In Ireland, breaches of GDPR or the upcoming NIS2 Directive can lead to significant fines from regulatory bodies like the Data Protection Commission (DPC) or the National Cyber Security Centre (NCSC Ireland). General liability policies do not cover these regulatory penalties.
• Third-Party Liability from Data Breaches: If a data breach at your company impacts your customers or partners, leading to their financial losses, general liability will not cover the legal defence costs or settlements arising from these third-party claims.

Real-World Claim Scenarios: The Gap in Action

Let's look at how this plays out for Irish businesses:

Scenario 1: The Phishing Attack and Data Theft

A small Irish engineering firm falls victim to a sophisticated phishing attack. An employee unknowingly provides credentials, allowing attackers to access their customer database containing sensitive personal and project information. The attackers exfiltrate the data.

• General Liability: Provides no coverage. There's no bodily injury or physical property damage.
• Cyber Insurance: Covers forensic investigation to identify the breach's scope, legal advice on reporting obligations to the DPC, costs of notifying affected customers, credit monitoring services, and potential legal defence if customers sue for damages.

Scenario 2: The Ransomware Lockdown

An Irish logistics company experiences a ransomware attack that encrypts all its servers, bringing its entire operation to a standstill. They cannot access shipping manifests, track deliveries, or process new orders.

• General Liability: Provides no coverage. No physical damage to property or bodily injury.
• Cyber Insurance: Covers the cost of IT forensics to decrypt systems or rebuild from backups, potential ransom negotiation and payment (if deemed necessary and covered by policy terms), and business interruption losses for the period the company was unable to operate.

These scenarios highlight why asking, "do I need cyber insurance if I have general liability?" is crucial. The answer is unequivocally yes, because the risks are fundamentally different and the financial consequences can be catastrophic.

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What This Means for Your Business

Cybersecurity is no longer optional for Irish businesses. understanding the limitations of general liability and the necessity of dedicated cyber insurance is paramount. The regulatory landscape in Ireland, with GDPR and the impending NIS2 Directive, places significant responsibilities on businesses to protect data and maintain operational resilience. Failure to do so can result in not only financial losses from an attack but also substantial fines and reputational damage.

Cyber insurance is not a replacement for robust cybersecurity measures; rather, it's a critical component of a comprehensive risk management strategy. It acts as a financial safety net, helping your business recover from incidents that even the best preventative measures might not stop. It allows you to focus on getting back to business, rather than facing financial ruin.

Ready to Strengthen Your Security Posture?

Pragmatic Security works with Irish SMEs to build practical, proportionate cybersecurity programmes that protect your business, satisfy regulators, and give you confidence. Whether you need NIS2 compliance support, a vCISO on retainer, or a one-off security assessment, we're here to help.

Book a free 20-minute strategy call today — no jargon, no hard sell, just practical advice from an experienced Irish cybersecurity professional.

Or contact us at [email protected] or call +353 870 515 776.

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If your cyber insurance coverage or how to reduce your premiums is something you're thinking about, the best starting point is a structured conversation.

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