This clause requires you to buy insurance that covers data breaches, ransomware attacks, and other digital security incidents. The clause typically sets a minimum coverage amount (for example, £5 million) and may require you to notify the other party if you have a breach. This matters because cyber attacks are now common and expensive—a single breach can cost hundreds of thousands to fix, notify affected people, and defend lawsuits. Without this insurance, you'd pay these costs yourself, which could destroy a small business.
Before signing, ask the other party exactly what "cyber incident" means in their definition—some clauses are vague and cover almost nothing. Get a cyber insurance quote immediately; premiums vary wildly depending on your industry and data sensitivity, so don't assume it's affordable. If the required amount seems high, ask for evidence of why they chose that number and negotiate down if it's unrealistic for your business. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires you to buy insurance that covers data breaches, ransomware attacks, and other digital security incidents.
Why should I care about this clause?
The clause typically sets a minimum coverage amount (for example, £5 million) and may require you to notify the other party if you have a breach.
What are my options?
This matters because cyber attacks are now common and expensive—a single breach can cost hundreds of thousands to fix, notify affected people, and defend lawsuits.
How does this affect small businesses?
Without this insurance, you'd pay these costs yourself, which could destroy a small business.