Cyber insurance helps startups pay for claims after a data breach or network security failure. Depending on the coverage you buy, it can also pay your own incident response and recovery costs.
If a customer has asked for proof of cyber insurance, start with the insurance clause in their contract. Then check what you would need if an incident happened tomorrow: legal help, an investigation, recovery support and protection against customer claims.
When should a startup buy cyber insurance?
Consider it when you start handling customer data, connect to customers’ systems or depend on your software being available. That includes SaaS, AI, fintech, health-tech and developer-tool businesses.
A customer contract or security review often creates the first deadline. Bring the requested limits and coverage wording to your insurer before you promise to meet them. The same applies when a new enterprise customer gives your product access to more sensitive information.
What does cyber insurance cover?
There are two parts to understand:
- Third-party liability: claims other people bring against your company after a covered security or privacy failure.
- First-party costs: your company’s own costs to investigate, respond and recover.
The FTC’s cyber insurance guide recommends considering whether you need one or both.
At Corgi, our base cyber coverage addresses third-party network security and privacy liability. First-party protection requires the relevant endorsement. Our cyber coverage guide explains the options:
What you want protected — Coverage to check
- A customer sues after a covered data breach — Base network security and privacy liability, including defense and covered damages
- You need forensics, breach counsel and customer notifications — Breach response / event management endorsement
- An attacker demands a ransom — Cyber extortion endorsement; ransom payments must also be legally permissible
- A covered attack interrupts your business — Business interruption endorsement; check its trigger and waiting period
- A fraudulent instruction causes a money transfer — Funds transfer fraud endorsement
- A regulator investigates a breach — Regulatory defense is excluded from the base policy; ask about an available extension and legally insurable penalties
For example, a stolen database can lead to both notification bills and a customer lawsuit. Check that your quote addresses both kinds of costs.
How to choose cyber limits and retention
Start with your customer requirements, then look at the data you hold and the disruption you could afford. Review these four points:
Limits
the amount available for a claim and across the policy year. Check smaller limits that apply to particular coverages, too.
Defense costs
our published cyber summary puts them within the limit, so legal bills reduce what remains for a settlement or judgment.
Retention
the covered costs your business must bear. Choose an amount you could fund during an incident.
Timing
for claims-made coverage, check the retroactive date and reporting requirements. Keep continuity in mind when switching insurers.
If you rely heavily on one cloud provider, ask how a provider outage is treated. Your own downtime and a supplier’s downtime may have different coverage triggers.
Prepare your cyber application
Give your finance and technical leads this short list:
- Business: legal name, product description, revenue and where you sell. Include implementation work and AI features.
- Data: what customer and employee information you handle, where it lives and which customer systems you can access.
- Security: where MFA is enforced, including email, remote access and administrator accounts. Identify exceptions, patching practices and the person responsible.
- Recovery: backup frequency, how backups are protected, and the date and result of your latest restoration test.
- Contracts and policies: customer insurance clauses, requested limits, existing declarations and endorsements, renewal dates and deal deadlines.
- History: incidents, claims and the changes made afterward. Follow the application’s questions about scope and dates.
Describe the controls you have today. Keep planned improvements separate. CISA recommends phishing-resistant MFA, protected offline backups and regular recovery testing; those are useful security practices as well as details worth having ready.
Why buy startup cyber insurance with Corgi?
We offer Cyber alongside Tech E&O in our startup insurance packages, with General Liability and D&O available too. You can bring your customer requirements, existing policies and renewal date to one team, then review the limits and extensions together.
Intryc CEO Alex Marantelos described completing the application in five minutes, having the policies packaged for him, and getting direct support from the Corgi team. That combination matters when an insurance request is holding up an enterprise deal: a straightforward application and people who can explain the coverage.
Get a Corgi quote, or talk to our team with the insurance clause you need to meet.
Frequently asked questions
How much does cyber insurance cost for a startup?
The price depends on your business, data exposure, security controls, limits and selected coverage. Compare quotes on the same basis, including retentions and first-party extensions. Our startup insurance cost guide also explains package budgeting.
Is cyber insurance the same as Tech E&O?
No. Cyber addresses security and privacy risks. Tech E&O addresses claims that your technology work caused a customer financial loss. Software startups should review both; see our Tech E&O and Cyber comparison.
What should we do if a breach is already happening?
Follow your incident response plan and contact your insurer using the policy’s reporting instructions. Preserve evidence and involve appropriate security and legal specialists. The FTC’s breach response guide explains the immediate steps and notification questions.
