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 Texas, cyber insurance is designed to mitigate the risks associated with electronic business operations by providing coverage for various types of cyber events. These policies typically cover the financial losses a business may suffer due to incidents like data breaches, malware, ransomware, and other cyber threats, as well as the liability arising from the exposure of sensitive customer information such as credit card details and personal identification numbers. While Texas does not have specific statutes mandating cyber insurance, businesses are encouraged to consider such policies as part of their risk management strategy, especially given the Texas Business and Commerce Code which requires businesses to implement and maintain reasonable procedures to protect sensitive personal information. Additionally, the Texas Privacy Protection Act requires businesses to notify affected individuals of data breaches involving their personal information. Cyber insurance can help businesses comply with these legal requirements by providing resources for breach response and notification efforts.