Do You Need Shopify Cyber Insurance? A 2026 Merchant Guide

The financial stakes of digital commerce have never been higher. 

In 2025, the global average cost of a data breach reached $4.4 million, according to IBM. It’s a market reality that has driven the global cybersecurity insurance market to a forecast of $21.59 billion in 2025, a 21.5% year-over-year increase.

Whether you host occasional popup shops or run a thriving ecommerce store, the right cyber insurance helps your business run smoothly. 

Here, we’ll demystify cyber insurance, outline its key components, and explain why it’s essential for every retailer. 

What is cyber insurance? 

Cyber insurance—often called cyber liability insurance—is a policy designed to protect organizations from the potentially massive financial damage of modern cyber incidents. This includes first-party financial losses (direct losses from cyber crimes) and third-party losses (losses from customer lawsuits, a common feature of cyber crimes).

Whether it’s a data breach, a ransomware attack, or a major service outage, these policies reimburse the direct costs and related losses that can otherwise cripple a balance sheet. It is the transfer of residual risk from your ledger to an insurer’s, in exchange for a regular premium you can include in your budget.

Most insurers now bundle policies with risk-assessment platforms and demand strict security best practices before binding a policy. This step benefits both parties—insurance companies don’t want to insure companies that can’t protect themselves, and you obviously benefit from refining your security best practices. You strengthen your defenses to get the coverage, then the coverage protects you if those defenses are ever breached.

The shared responsibility model: What Shopify protects vs. what you're responsible for 

On Shopify, security is a partnership. We secure the commerce platform and core infrastructure, while you control how your store is configured and operated.

What Shopify protects:

We manage the security of the underlying infrastructure so you don't have to build a bank vault from scratch.

• Core infrastructure: We maintain a comprehensive information security program that includes vulnerability assessments, access controls, and 24/7 incident response.
• PCI compliance: All Shopify stores are Level 1 PCI DSS compliant by default. This compliance extends to your storefront, shopping cart, and web hosting.
• External validation: We undergo regular independent SOC 2 Type II and SOC 3 audits to verify our security and availability controls.

💡 For more information, review our Compliance Reports. 

What you’re responsible for:

While we do everything we can to protect the platform, and everyone on it, that fact does not prevent cybercriminals from targeting your store. You own the risk for how you use the platform and the day-to-day decisions that protect your business data.

• Account security: You are responsible for keeping credentials confidential, enforcing strong password hygiene, and assigning staff accounts with appropriate permissions.
• Store operations: You control the products you sell, the markets you enter, and how you handle transactions, including fraud management and refunds.
• Regulatory compliance: You must ensure your business complies with privacy and data-protection laws like GDPR or CCPA in every jurisdiction where you operate.
• Third-party risk: You are responsible for securing any custom integrations, third-party apps you install, and maintaining backups of your store data.

You are also responsible for training all staff on adhering to the same security best practices you undertake personally.

Why you need this information

Insurers underwrite policies based on the controls you manage. To get a policy, you’ll want to prove you’ve implemented your own safeguards, such as multi-factor authentication (MFA) and tested backups, on top of Shopify's baseline security.

Top four cyber risks to consider

Data breaches from third-party apps 

Commerce today relies on a complex stack of integrations, like marketing plugins, analytics tools, and custom apps. But remember, every time you install an app, you open the door for potential attacks by cybercriminals. 

Verizon’s 2024 Data Breach Investigations report found that 15% of breaches involved a third party, a 68% increase over the previous year. Hackers are actively hunting for weaknesses in popular software to launch ransomware attacks. 

To stay safe, vet your vendors, limit their permissions, and immediately delete any app you aren't using. Before downloading any new apps, take the time to research their security and whether they have been involved in past data breaches.

In order to have an app listed in the Shopify App Store, developers must take steps to show the app is secure, such as demonstrating Transport Layer Security (TLS) with a valid TLS/SSL certificate.

📚Read: What Is Data Breach Insurance? Why Your Business Needs It

Phishing, social engineering, and account takeover 

We’re all human. We click links we shouldn't, we reuse passwords, and we get tricked. Verizon found that this human element is a major factor in security breaches. Attackers know this, and they target people, not just code, to steal credentials and slip into admin dashboards. 

According to IBM, compromised credentials are a top attack method, costing businesses an average of nearly $4.4 million per breach. It takes just 21 seconds for the average person to click a phishing link. For a store owner, that’s all the time a hacker needs to hijack a staff account and redirect your payouts.

Ransomware attacks 

Ransomware is malicious software that hackers smuggle into your system that locks your files or devices. The hackers will offer to unlock the data for you—in exchange for a hefty fee (hence the term ransomware). For a retailer, this is a nightmare scenario that involves frozen orders, inaccessible inventory, and total silence with your customers.

These extortion techniques are common, appearing in nearly half of all breaches analyzed by Verizon. Even if you refuse to pay the ransom, the cost of downtime and fixing your systems can be crippling for a high-volume business. In fact, professional hackers who make a living with these crimes know how high they can ratchet up a fee and still make it worth your while to pay relative to the massive losses you’ll incur from having your entire operation held hostage.

Employee error 

It’s easy to overlook, but simple mistakes by staff or contractors are a major risk. Whether it’s misconfiguring a cloud database, emailing a customer list to the wrong person, or falling for a scam, accidental insiders are still a primary cause of data leaks. Double down on staff security training, and hold regular refresher courses and updates as new common scams develop.

What does a cyber insurance policy actually cover? 

Policies often split coverage into two distinct buckets to cover the full blast radius of an attack:

• First-party coverage: This pays for the immediate damage to your own business. It covers forensics to find the leak, incident response teams to stop it, data restoration to get back online, and business interruption costs to cover lost revenue while you were down.
• Third-party liability: This covers the ripple effects. If your customers or partners sue because their data was exposed, this covers the legal fees, settlements, and regulatory fines.

First-party costs: Covering your direct losses 

First-party costs are the checks you have to write right away to contain the damage, investigate the cause, and restore operations. Marsh India reports that clients incurred incident response costs averaging $2.5 million. 

A 2024 NetDiligence study found that for small and midsize enterprises (SMEs), the average claim was roughly $205,000. However, when business interruption was involved, that average jumped to $995,000.

Third-party costs: Liability from lawsuits and fines

Beazley notes that third-party protection addresses claims made by external parties, including:

• Regulatory defense: Costs and penalties arising from data protection or security proceedings
• Payment card liability: Fines and assessments from card brands following a data compromise
• Media and network liability: Damages related to IP infringement, defamation, or failure to comply with privacy policies 

How to get a cyber insurance policy for your online store 

Now that you understand the difference between first-party and third-party coverage, the next step is finding the right policy. 

Before you get a quote, have the following information handy. Underwriters will use this to grade your risk hygiene:

• Gross annual revenue: Higher revenue often equals a bigger target on your back, and rates will vary accordingly.
• Data volume and type: How many credit card numbers or customer records do you store?
• Security controls: Do you use multi-factor authentication (MFA) on email and admin accounts? Do you have offline backups?
• Vendor list: Which third-party software or cloud providers do you rely on?
• Past incident history: Have you experienced a breach or ransomware event in the last 3–5 years?

Cyber insurance providers

Cyber insurance is a specialized market. While many general carriers offer it as an add-on, standalone policies often provide better limits and specialized response teams.

Walt Capell, president and owner of Workers Compensation Shop, recommends finding an insurance agent you can trust and having an in-depth conversation about your business needs.

“Work with an independent agent who can quote multiple insurers and play them against each other to get the best possible value (coverage + price),” recommends Matthew A. Struck, partner at Treadstone Risk Management.

You’ll also want an agent who can “provide risk management advice to help prevent claims from happening, to make your business a more attractive one to insure and drop future business insurance costs,” Matthew adds.

Walt agrees that working with an independent agent will help retailers get the best coverage and value. “They can shop your policy around to multiple carriers, and they also have the knowledge about which carriers are actively looking to quote the coverages you’re looking for,” he says. “This can help you get bigger discounts.

It’s best to shop around for the best policy. Here are some cyber insurance providers you can explore:

• Chubb
• AXA XL
• Hiscox
• The Hartford
• Beazley

Choosing your insurance policy

Once you’ve gotten your quotes, you’ll need to compare policies and choose the best one.

“A good agent isn’t going to recommend coverage unless your business is truly at risk,” says Walt. “Insurance agents interact with people who are filing a claim on a daily basis. They know what it feels like for a business owner to have a fire or some other disaster and not have enough insurance coverage. When they recommend additional coverage, it’s usually because of one of these experiences.”

While shopping around, ask insurance agents about the following:

• Discounts: Some providers may offer discounts for bundling policies or implementing certain safety measures.
• Claims process: Understand how they handle claims and if the provider has a good reputation for fair and timely claims processing.
• Optional coverages: Inquire about additional coverages that might be beneficial, such as cyber liability or equipment breakdown insurance.

What about other types of retail insurance?

Retail store owners need to choose insurance that matches their unique needs and requirements. 

Here’s a breakdown of 10 additional types of retail insurance that a retail store may need: 

1. General liability insurance

This is one of the most basic types of insurance all businesses should consider. It protects against bodily injury, property damage, and personal injury claims. For instance, if a customer slips and falls in your store, general liability insurance can cover their medical expenses and legal costs if they sue.

2. Property insurance

This covers damage to or loss of business property, which includes the physical building (if you own it) and its contents, such as inventory, fixtures, and equipment. It protects against perils like fire, storms, theft, and vandalism.

3. Business interruption insurance

This coverage, often a part of property insurance or a business owners policy, compensates for lost income and fixed expenses if you cannot operate due to a covered event like a fire or natural disaster.

4. Workers’ compensation insurance

If you employ staff, you’ll likely need workers’ compensation insurance. It covers medical expenses and a portion of lost wages if an employee gets injured or sick due to their job.

5. Commercial auto insurance

If your store owns and uses vehicles for business purposes, like delivery, you’ll need a commercial auto insurance policy to cover potential liabilities from accidents involving those vehicles.

6. Crime insurance

This protects your business from losses due to business-related crimes such as theft, fraud, or forgery.

7. Equipment breakdown insurance

This covers the repair or replacement of equipment that breaks down, such as point-of-sale systems, refrigeration units, or other machinery.

8. Employment practices liability insurance (EPLI)

This protects your business from claims made by employees related to discrimination, wrongful termination, harassment, and other employment-related issues.

9. Product liability insurance

If you sell products, there’s always a chance they might cause harm or injury. Product liability insurance can cover legal fees and damages if someone claims a product you sold injured them or caused property damage.

10. Tenants legal liability insurance

If you lease your retail space, this coverage can protect you if you’re found responsible for causing damage.