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Why do penetration testers need insurance?
If you attack the wrong target or cause a client's system to crash while in use, the result could be a lawsuit. Business insurance covers the cost of hiring an attorney when a penetration tester gets into ethical or legal trouble. It can also pay for data breaches, damaged equipment, and injuries.
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Insureon helps pen testing businesses compare quotes from the nation's leading insurance companies.
Our expert agents will help you find coverage that matches your unique risks and your budget.
What types of penetration testing insurance do I need?
These insurance policies cover common risks faced by penetration testers.
Technology errors and omissions insurance
Tech E&O covers lawsuits related to the quality of your work, such as failure to identify a security issue that later leads to a data breach. It's also called professional liability insurance.
BEST FOR
- Failure to identify cybersecurity issues
- System slowdowns and crashes
- Testing outside of the project scope
Cyber insurance
This policy covers expenses related to cyber threats, such as the cost of notifying clients whose sensitive data was stolen. It’s also called cyber liability insurance or cybersecurity insurance.
BEST FOR
- Client notification expenses
- Fraud monitoring services
- Downtime from a cyberattack
General liability insurance
This policy covers third-party lawsuits, such as a penetration tester who accidentally spills coffee on a client's laptop. You may need it to sign a commercial lease, loan, or contract.
BEST FOR
- Accidents that injure a client
- Damaged client property
- Accusations of libel or slander
Fidelity bonds
A fidelity bond provides compensation for your clients if one of your employees steals from them or commits fraud. It's also called an employee dishonesty bond.
BEST FOR
- Employee theft or fraud
- Unlawful data access by an employee
- Illegal funds transfer by an employee
Workers’ compensation insurance
Most states require workers' comp for penetration testing businesses that have employees. It also protects sole proprietors from work-related medical bills that health insurance might deny.
BEST FOR
- Medical costs from work injuries
- Disability benefits
- Workplace injury lawsuits
Commercial auto insurance
This policy covers costs if a vehicle belonging to your penetration testing company is involved in an accident. Most states require this insurance coverage for vehicles owned by a business.
BEST FOR
- Injuries caused by your vehicle
- Property damaged by your vehicle
- Vehicle theft and vandalism
Looking for different coverage? See more policies.
How much does penetration testing insurance cost?
A network penetration tester who works independently can expect to pay less for insurance than a larger company.
Factors that affect insurance premiums include:
- IT services and products offered
- Value of your computers and other business property
- Business income
- Types of small business insurance purchased
- Policy limits and deductibles
- Claims history
How do I get penetration testing business insurance?
It's easy to get insurance for penetration testers and other cybersecurity professionals if you have your company's information on hand. Our application will ask for basic facts about your business, such as revenue and number of employees.
You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed insurance agents work with top-rated U.S. providers to find the right coverage for your penetration testing company, whether you work independently or hire employees.
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FAQs about penetration testing insurance
Review answers to frequently asked questions about penetration testing and business insurance.
Why is penetration testing important in cybersecurity?
Every year, the financial impact of data breaches becomes bigger. In 2024, the average cost in the United States was $4.9 million, a 10% increase over the previous year. The causes of security breaches range from software misconfigurations to ransomware attacks and unauthorized access.
Businesses affected by a cyber incident might have to pay for notification costs, investigations, system downtime, or even ransoms. To avoid paying these costs, businesses should focus on data breach prevention and strengthening their security posture. That includes everything from two-factor authentication to employee training and firewalls.
Any company that's concerned about cybercriminals and data protection should also consider hiring a penetration testing business for a security assessment. That's especially true in the healthcare and financial sectors, where a data breach could release sensitive information belonging to thousands of customers.
Many regulatory requirements, such as the Health Insurance Portability and Accountability Act (HIPAA), mandate regular penetration testing. Insurance companies might also require pen testing before writing coverage for a business. By identifying an organization’s security issues and cyber risk profile through a proactive approach, it can save companies thousands of dollars in fines and other costs.
Is penetration testing the same as ethical hacking?
The terms penetration testing and ethical hacking are often used interchangeably. They are both cybersecurity measures used to identify vulnerabilities in a client's computer systems.
However, there are a few subtle differences:
- Penetration testing is a more narrow and systematic approach. The client defines the scope of the testing and the methods to be used. Testers prepare a detailed report of their findings and provide the client with a cybersecurity risk assessment.
- Ethical hacking, such as red teaming that emulates an attacker, is a broader approach that uses a wider range of techniques. For example, an ethical hacker might perform social engineering tests to find vulnerabilities in employees' security training, in addition to testing the company's IT systems.
Because ethical hackers are not restricted by scope, it's a riskier profession. Penetration testing services can typically get insured through traditional markets, while ethical hackers may need to buy coverage from a non-admitted carrier.
What other types of insurance should penetration testers carry?
Owners of penetration testing firms and other security testing businesses should consider several other types of insurance as part of a robust risk management plan. That includes:
- Business income insurance: This policy covers employee wages, rent, lost income, and day-to-day expenses when your office is forced to close due to damage from a fire, storm, or other covered property claim. It's also called business interruption insurance.
- Equipment breakdown insurance: If the computer you use to conduct testing or another piece of equipment fails unexpectedly, this policy can help pay to repair or replace it.
- Electronic data processing insurance: This policy protects against financial losses related to data loss on computers, backup drives, operating systems, network storage servers, and other eligible devices.
- Inland marine insurance: Because commercial property insurance only covers items at your business address, you may need inland marine insurance to protect your laptop and other equipment you bring to clients' offices.
If you have questions or need help finding the right insurance solutions for your risks, chat with a licensed agent today.