If you own a business, you may need to buy business insurance, coverage for your fleet of automobiles as well as other types of policies. Wondering if you need coverage for cyber liability? The answer depends on the type of business you have and the type of data you collect. Here's what to consider:

1. Do you collect and store data?

Do you have a spreadsheet of names and addresses for direct mail blasts? Do you have medical records, financial records or other types of client information that are sensitive? Do you have other details on clients stored either on your own servers or in a cloud hosted by a third party?

If you have answered yes to any of those questions, you have data, and you may want a cyber liability policy to protect your business in the case that information is breached.

2. Do you accept credit card payments?

If you don't store any customer data, but you accept credit cards, those numbers are data, and they need to be protected. In most cases, the credit card processing company with which you work should provide the equipment and encryption you need to collect and transmit that information safely without it being breached.

However, you should talk with your credit card processor to figure out who is liable for breaches. If there are any cases that the processor doesn't accept liability, you may need cyber liability coverage.

3. How much would a data breach cost your company?

Once you've assessed how much sensitive data you have, you should assess what it would cost to respond to a disaster. Based on the type of data you have, are your clients likely to sue you if their data is released to the world? Do you plan to offer your customers identify theft protection services after a data breach to ensure no accounts are opened in their names? What other expenses do you anticipate incurring if there is a data breach? If you cannot afford these costs out of pocket, easily, you should invest in cyber liability coverage.

4. Does your regular business insurance cover cyber liability issues?

Finally, before buying a new insurance policy, you should contact the insurance agent who handles your general business policy. Ask if cyber liability is covered under your plan. If so, what does it cover. Does it cover liability? Does it cover reclaiming stolen data? In some cases, if your business policy only covers some costs related to the breach, you may need the extra assurance of a cyber liability policy.