Information technology has grown astronomically over the last 70 years or so and is no longer restricted to Computers alone. This growth has now encompassed every field of human activity from business, education, government, banking, and even personal finance. This growth has also led to phenomenal growth in IT or cybercrimes and security breaches.

Losses due to cybercrime are staggering and the United States has an annual setback of over $150 million in terms of lost revenues and installation of protective software against viruses, malware, spyware, and even cookies that are doing surveillance and even hacking into sites and servers with sensitive information.   

What Is The Importance Of Hacker Insurance For Ecommerce Business?

Hacking is the most illegal and unethical process of identifying weaknesses in a website, server, or computer system and gaining access to protected information. This can be bank records, sensitive defense, and government information which the hackers thereafter sell to interested parties that can even be a foreign government or a business rival.

Hacker Insurance

Hackers are of several types and include white hat hackers, black hat crackers, grey hat hackers, script kiddies, phreakers, and hacktivists. Their activity can simply be ethical hacking to reveal system weakness to the process owners to illegal hacking with a view to access confidential information and sell to interested parties. Protective measures such as firewalls have been found to be ineffective and inadequate against hackers.

This growing threat and menace have led to the formulation of insurance policies to protect users and system owners from hackers. Hacking insurance is beginning to take shape by way of creating specific insurance policies for covering damages and losses against hacking and protecting E-commerce businesses from hacking attacks. 

Hacking insurance is different from existing conventional insurance policies. A conventional insurance policy coverage is primarily for physical assets and there is no scope for information assets. A conventional insurance policy has no provision to quantify hacks leading to employee dishonesty, intellectual property infringement, and unethical offenses over the internet. Hence a conventional insurance policy is drawn out to compensate for business monetary losses or even business shutdowns caused due to cybercrimes by hackers.

Insurance companies have begun to recognize this form of cybercrime and some of these insurance companies are beginning to address e-commerce crimes such as cyber extortion, copyright and trademark infringement, viruses, theft, and alteration of data since the turn of the Millenium. Insurance technology has also evolved to a stage where certain insurance companies have evolved into specialty insurance that protects their clients from virus or phishing attacks and network breaches. 

E-commerce businesses are increasingly turning towards hacker insurance and these insurance companies and specifically address the hacking risks of e-business. These companies not only provide insurance coverage but help protect consumer data. Hacking of E-commerce businesses can occur in several ways such as malware, phishing attacks, spamming, DoS and DDoS (distributed denial of service), SQL injection, BOTS, e skimming, brute force, and man in the middle which can severely disturb and disrupt e-commerce businesses.      

The potential for insurance companies is huge. The e-commerce business has touched US$ 4 trillion and accounts for 14% of spending around the world. This huge potential has led to 32% of all cyberattacks being targeted at e-commerce businesses.


Hacker insurance has taken many forms and they are general and product liability insurance, cyber insurance, commercial crime insurance, and technology errors insurance.

The best feature about Hacker insurance is that the insurance companies recommend installing the best hacking countermeasures to e-commerce businesses to prevent hacking and help provide several layers of safety in addition to providing monetary compensation for losses due to hacking.