Specialty · Insurance Term
Ransomware (Cyber Extortion)
Definition
Ransomware is harmful software that locks or steals your data and demands payment to release it. Depending on the policy, cyber insurance may pay response costs and lost income and, in some cases, the ransom itself.
In Plain English
Attackers often get in through a fake (phishing) email, a weak password or software that was never updated. Once inside, they lock files and may threaten to publish stolen data. Property managers, hotels and medical office owners hold tenant, guest or payment data, which can make them targets.
A cyber liability insurance policy may pay for an outside investigation, data restoration, lost income, and legal and notice costs after a data breach. Some also pay the ransom where the law allows it. Many policies require certain security steps, like a second login step (multi-factor authentication) and backups.
Property and general liability policies generally do not cover ransomware losses. Computer fraud coverage under a crime policy deals with theft of money, which is a different risk.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: a hotel's reservation system is locked by ransomware for 5 days. The hotel loses $50,000 in bookings and spends $30,000 on forensics and recovery. A cyber policy with business interruption and incident response coverage might pay these costs, after its retention and waiting period.
What to Watch For
- Ask whether your cyber policy covers extortion, business interruption and data restoration.
- Confirm the security controls the policy requires, such as multi-factor authentication and offline backups.
- Know the insurer's incident hotline, and call it before paying anyone or hiring vendors.
- Include your property management software and outside vendors in your cyber risk review.
Last updated October 14, 2026 · Primesure editorial team · How We Write