Cyber insurance is a special insurance policy that covers your business’ losses and liability for intrusions into your business’s computers, computer networks, software, payment processing, and other information technology (cyber events). Cyber events that may be covered by cyber insurance include data breaches, malware, ransomware, viruses, spyware, wire transfer fraud, phishing, denial-of-service (DoS) attacks, Trojans, adware, botnets, man-in-the-middle attacks, credit card web skimming, and others.

In addition to breaching a business’s own valuable information and processes, a data breach may target a business’s sensitive customer information, such as credit card numbers, account numbers, telephone numbers, mailing addresses, passwords, driver’s license numbers, Social Security numbers, health records, and other personally identifiable information (PII).

In Colorado, cyber insurance is designed to mitigate the risks associated with electronic business operations by providing coverage for various cyber events. These events can range from data breaches and malware attacks to more sophisticated cyber threats like ransomware and phishing schemes. The coverage typically includes both the business's direct losses and its liability to third parties whose information may have been compromised. Colorado businesses holding sensitive customer information, such as PII, are at a higher risk of cyber threats and may find cyber insurance particularly beneficial. While there is no specific state statute in Colorado mandating businesses to carry cyber insurance, state laws such as the Colorado Consumer Protection Act and data breach notification laws impose certain responsibilities on businesses to protect consumer information and to notify affected individuals in the event of a breach. Failure to comply with these regulations can result in significant legal and financial consequences, making cyber insurance an important risk management tool for businesses operating within the state.