Cloud Computing Insurance

A specific cyber insurance program tailored for cloud services businesses

Expert: Andrew Flueckiger Written by Andrew Flueckiger
Expert: Andrew Flueckiger
Written by Andrew Flueckiger

Andrew Flueckiger in an insurance writer for He's a licensed insurance agent who has earned his CIC designation and has written extensive insurance articles for many publications.

Cloud Computing Insurance

Cloud computing services are becoming more and more popular, with nearly $1 trillion spent on cloud computing services in 2020. Cloud computing allows businesses to store their data and process information on the cloud, which frees up internal storage, streamlines business operations, and can help your business work quickly and effectively. 

The businesses offering these cloud computing services have a unique risk: they are storing their clients’ information online in the cloud. It’s not tangible or physical data and it’s not being stored on the business’ physical property. Yet the cloud computing service business is fully responsible for this data and for ensuring that nothing happens to it. 

If that data is compromised, the cloud business’s clients will expect to be compensated. The solution for these cloud services businesses is cloud computing insurance, which is a specific insurance program offered for them. You can turn to your local independent insurance agent for a customized cloud computing insurance solution that can protect your business. 

What Is Cloud Computing Insurance? 

Cloud computing insurance is designed specifically for cloud services providers who operate a cloud data service for their clients. If your cloud services business is held liable for your clients’ data that’s lost, stolen, or compromised, you’ll want insurance coverage to come to the rescue. 

Cloud computing insurance is a type of liability insurance policy, which differs from a property insurance policy where physical property is covered. You can’t cover the physical data in the cloud, but that data is often very important and can result in legal costs for your business if there’s a loss. 

The insurance policy normally will include monetary compensation to your clients if they lose their data, as well as paying settlement costs, defense costs, and other legal fees associated with a lawsuit. 

Most cloud computing insurance programs also offer a type of errors and omissions (E&O) coverage as well, which broadens your liability coverage to include professional mistakes that your business may make which could lead to a claim. 

Cloud computing insurance normally can include data breach coverage as well, which gives money to your own business if your data is stolen or compromised. Data breaches can cost a lot of money to fix and play damage control, so cloud computing insurance programs are designed to cover the full range of these risk exposures. 

Why Is Cloud Computing Insurance Important? 

Businesses often use cloud computing services for sensitive and important data. Cloud computing is becoming even more popular as the cost of using cloud services becomes more affordable and those services become more accessible to nearly any type of business. 

Cloud services were the focus of about 20% of data breach cybercrimes in 2018, which shows that cybercriminals know that cloud services can be a worthwhile target for their criminal activity. 

Average Cost of Top Five Cyber Insurance Claims by Cause of Loss (From 2014-2017)

Average Cost of Top 5 Cyber Insurance Claims

Percentage of Customers Lost by Companies Due to Attacks

Percentage of Customers Lost by Companies Due to Attacks

Top Five Cyber Insurance Claims by Cause of Loss (From 2014-2017)

Top 5 Cyber Insurance Claims by Cause of Loss

The simple fact is that clients are trusting your cloud computing business with their sensitive data, data that’s important to their business. You need to protect this data and your clients’ trust, which is what cloud computing insurance can do. 

You won’t have cloud computing coverage on any of your other commercial insurance policies, which likely includes general liability and commercial property insurance. Neither of these policies covers data that you would store on the cloud for your clients. 

You’ll need a specialized insurance program that can reimburse both you and your clients if you have a data breach and a policy with high enough limits to cover claims, which could be expensive. You can speak with a trusted independent insurance agent to determine if your business has the appropriate coverage limits with the right coverage. 

Having a cloud computing insurance policy can also convey trust to potential clients. Clients want to know that their data is secure and that you’re a reliable business to trust with their data. Having an insurance program in place shows that you value their data and their business and are doing everything you can to protect it. 

What’s the Difference Between Cloud Computing Insurance and Cyber Liability Insurance? 

Cloud and computing insurance and cyber liability insurance contain many similarities in coverage, including both liability and data breach components. The main difference is that cloud computing insurance is specifically designed for cloud services companies, while cyber insurance is designed for nearly everyone else. 

Cyber insurance, or cyber liability insurance, is bought by businesses using the internet and with nearly any type of online or digital presence. They can buy cyber insurance to cover the cost of data breaches and legal suits against them. 

Cloud computing insurance shares many of the same components as cyber insurance, but is only used by cloud services companies. It’s designed to cover the unique risk exposures that cloud companies face, such as being a “virtual bank” of information for their clients. 

Some of these terms get thrown around interchangeably, and it could be argued that cloud computing insurance is a subniche of the larger cyber insurance world. Cyber insurance is constantly changing and evolving to reflect the realities of cyber security and the risks posed by cyber criminals. 

But a cloud computing business definitely needs the specific insurance program of cloud computing insurance to accurately protect their business. A standard cyber insurance policy wouldn’t be adequate or applicable to their business. 


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How Do I Find Cloud Computing Insurance? 

Cloud computing and cyber risks can be a complicated and ever-changing world. Cyber risks are always evolving to adapt to the latest cybersecurity measures, so it’s imperative for your business to have the most up-to-date insurance coverage and to also practice sound cybersecurity risk management strategies. 

The best way to protect your business with the most effective insurance is by working with a local and trusted independent insurance agent. Your agent can act as your business advisor and consultant on all cyber-related things, including how cyber insurance and cloud computing insurance can complement your existing commercial insurance package. Your independent insurance agent will also be able to work with different insurance companies to find the best fit for your cloud computing business. 

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