Insurance Curator The hospitality industry — restaurants, bars, hotels, and event venues — is a top target for cybercriminals. Point-of-sale (POS) systems handle cardholder data constantly, staff use mobile devices, and guests expect online booking, contactless payments, and fast Wi‑Fi. If you operate in New York City, Los Angeles, Chicago, Miami, or Houston, your exposure is high and state/regulatory requirements vary. This guide tells you exactly what to ask your broker when buying cyber liability and POS breach coverages so you can protect revenue, reputation, and compliance.
Why cyber liability and POS breach coverage matter
- The average cost of a data breach in the United States is substantial — IBM’s 2023 report put the U.S. average at roughly $9.44 million per breach, including lost business and recovery costs. (Source: IBM)
https://www.ibm.com/reports/data-breach/ - POS compromises trigger card-brand assessments, forensic investigations, breach notifications, PCI fines, refunds, fraud losses, legal defense, and often a material business interruption while systems are rebuilt.
- Regulatory regimes (state breach notification laws, and for New York-based institutions, 23 NYCRR 500) and card brands expect timely response and remediation; having insurance with a prompt response team is critical.
Sources for additional context:
- PCI Security Standards Council: https://www.pcisecuritystandards.org/
- Coalition (insurer/broker with cyber products): https://www.coalitioninc.com/insurance
- Hiscox — small business cyber insurance overview: https://www.hiscox.com/small-business-insurance/cyber-insurance
The core coverages hospitality operators need
Ask your broker whether these elements are included (or available as endorsements):
- First‑party breach response — forensic IT, notification, credit monitoring, PR, legal counsel.
- Business interruption (BI) from cyber events — loss of income, contingent BI if a vendor or payment processor is down.
- Extortion / ransomware — negotiation, payment, and costs to restore data.
- PCI fines and card‑brand assessments — payer of card network fines and reissuance costs.
- Third‑party liability — claims by customers, vendors, or banks for negligent handling of data.
- POS malware & skimmer coverage — manufacturer/vendor exclusion checks.
- Social engineering / funds transfer fraud — coverage for wire transfer losses caused by employee deception (often excluded).
- Regulatory defense & penalties — privacy investigations and fines (where insurable).
Key questions to ask your broker (with why each matters)
- What exact incidents are covered under “cyber” vs. general liability?
Why: General liability rarely covers data breaches or regulatory fines; you need a dedicated cyber policy. - Are PCI fines, card‑brand assessments, and forensic costs covered as first‑party or third‑party?
Why: Card-brand assessments can be very large and are often subject to sublimits. - What are the policy sublimits for breach response, PCI, and ransomware?
Why: Policies may have a $100k sublimit for PCI fines inside a $1M limit—insufficient for a POS compromise in a busy New York restaurant. - Does the policy cover social engineering and ACH/wire transfer fraud?
Why: Hospitality businesses routinely transfer funds and are targeted with invoice scams. - Are dependent/contingent BI losses (e.g., payment processor outage) covered?
Why: If a third‑party payment provider goes down, you can lose revenue even if your systems are intact. - Are vendor or manufacturer exclusions applied to POS hardware or software failures?
Why: Some carriers exclude losses caused by a specific vendor’s products unless a vendor liability endorsement is added. - What response resources does the carrier provide (forensics firm, breach coach, PR)?
Why: Quick, coordinated response reduces loss and reputational damage. - What underwriting controls lower premiums (MFA, EDR, encryption, PCI Level)?
Why: Demonstrated controls can materially reduce premiums and improve terms. - What are typical deductibles / retentions and are ransom payments subject to retention?
Why: Many policies have $10k–$100k retentions; ransomware payments sometimes fall inside or outside retention. - How does the insurer handle multiple-location programs and shared limits?
Why: Multi-location hotels or restaurant groups need program structuring to avoid single-location depletion.
Typical limits, sublimits, and retentions — quick reference table
| Coverage element | Typical limit options | Common sublimits / retention notes |
|---|---|---|
| Cyber liability (aggregate) | $500k, $1M, $2M, $5M+ | Small restaurants often choose $1M; multi-site hotels usually $2M+ |
| Breach response (forensics, notification) | Included in limit or separate | Sublimits sometimes $100k–$250k; ask for no/large sublimit |
| PCI fines / card brand assessments | Usually sublimit | $50k–$500k sublimits common — verify adequacy |
| Business interruption (cyber BI) | Based on gross profit / projected revenue | Waiting periods 48–72 hrs typical; can be 24 hrs if endorsed |
| Ransom/extortion | Included or endorsed | Some policies require approval before payment; retention $10k–$50k |
| Social engineering / funds transfer | Often optional | Sublimits $50k–$250k; frequently excluded unless purchased |
Pricing examples and carriers (U.S. hospitality market)
Premiums depend on revenue, controls, claims history, POS type, and location. Below are representative starting ranges for single-location hospitality outlets (U.S. metropolitan examples). These are estimates; get quotes for your specific facts.
- Hiscox (small business cyber) — small restaurants: approx. $400–$1,200/year for basic cyber liability with $500k–$1M limits depending on controls and revenue. (See Hiscox small business cyber overview)
https://www.hiscox.com/small-business-insurance/cyber-insurance - Coalition — cyber insurance with active security monitoring options; typical small hospitality premiums: $600–$2,000/year for $1M limits, influenced by security posture and PCI status. (See Coalition insurance overview)
https://www.coalitioninc.com/insurance - Chubb / CNA / Travelers / Beazley — carriers servicing larger hospitality portfolios and hotels: $1,500–$10,000+/year for higher limits, specialized endorsements, and large multi‑location programs. These carriers price based on revenue exposure, historic losses, and unique risks.
Important: If you run a high‑volume restaurant in Manhattan or a multi‑property hotel chain in Los Angeles, expect higher premiums and stronger underwriting scrutiny. Always ask carriers for examples of hospitality claims they’ve handled.
Underwriting and risk control: what insurers will ask for
Be prepared to provide:
- Annual revenue and transaction volume by channel (in‑store vs. delivery vs. online).
- POS vendor name and version, remote access policies, patching cadence.
- PCI compliance level and date of most recent Report on Compliance (ROC) or Attestation of Compliance (AOC).
- Network diagrams, segmentation between POS and guest Wi‑Fi.
- Controls: endpoint detection & response (EDR), multi‑factor authentication (MFA), encryption, backups, employee training, vendor SLAs.
- Claims history (previous breaches, social engineering losses).
Improving controls (MFA, POS encryption, EDR, regular PCI scans) often reduces premium and mitigates exclusions.
Red flags and common exclusions to watch for
- Sublimits that cripple response — tiny PCI or forensic sublimits relative to your revenue.
- Vendor exclusion for POS — insurer denies if loss is tied to a specific vendor without a vendor‑liability endorsement.
- Pre‑existing incident exclusions — failure to disclose prior breaches can void coverage.
- No coverage for social engineering or silent cyber — many forms of fraud are excluded unless bought.
- Policy conflicts with card brands — carriers sometimes exclude fines deemed punitive or not insurable under state law.
How to structure a request to your broker (sample checklist)
- Desired aggregate limits (start with $1M+ for single-location; $2M+ for multi-location).
- Request breakdown: breach response sublimit, PCI sublimit, BI limit, ransomware limit, social engineering limit.
- Ask for vendor liability endorsement for POS provider(s).
- Confirm breach response partners the insurer will assign (forensic firm, breach coach, PR).
- Request “claims examples” for hospitality clients to evaluate carrier experience.
- Obtain written confirmation on retentions for ransom payments and forensics.
Further reading (internal resources to build your coverage plan)
- Insurance for Restaurants and Hospitality Businesses: Coverage Every Operator Should Carry
- Business Interruption and Property Insurance for Restaurant Owners
- How to Structure a Multi-Location Insurance Program for Restaurants and Hotels
Final recommendations
- Get an insurer with proven hospitality experience — carriers that know POS incidents and card‑brand processes (e.g., Coalition, Chubb, Beazley, Hiscox) shorten response time and reduce loss.
- Buy adequate limits and minimize crippling sublimits — a $100k PCI sublimit won’t cover a major POS compromise in NYC.
- Strengthen underwriting controls — implement MFA, POS encryption, segmentation, EDR, and document PCI compliance to reduce premiums and improve terms.
- Require vendor‑liability wording when possible — ensure your POS providers carry their own cyber/GL limits and obtain vendor contracts that allocate responsibility.
When you talk to your broker, use the checklist above, demand hospitality claim examples from the carrier, and insist on clear written answers about sublimits and retentions. A properly scoped cyber policy is no longer optional for restaurants and hospitality businesses operating in major U.S. cities — it’s a business continuity and compliance necessity.