Cyber Liability Insurance for Contractors
Why Contractors Are Bigger Targets Than They Think
Most contractors assume cyber insurance is for tech companies or large corporations. In reality, construction firms are prime targets because they combine high-dollar transactions, decentralized operations, and minimal cybersecurity controls.
Cyber incidents don’t look like “data breaches” in construction. They look like:
- Projects grinding to a halt
- Payroll failing on Friday
- Wire transfers sent to criminals
- Access to plans, schedules, and permits suddenly locked
Cyber risk for contractors is
business interruption risk, plain and simple.
Why Contractors Are Especially Vulnerable
1. Email-Based Fraud Is Everywhere in Construction
Construction runs on email: change orders, invoices, lien releases, wiring instructions.
A single compromised email account can lead to:
- Fraudulent wiring instructions
- Fake subcontractor invoices
- Diverted owner payments
These losses are often six figures and not covered under standard crime or property policies.
2. Ransomware Shuts Down Jobsites
Contractors rely on:
- Estimating software
- Project management platforms
- Cloud-stored plans and specs
- Accounting and payroll systems
If ransomware locks those systems:
- Crews sit idle
- Schedules collapse
- Liquidated damages exposure increases
Cyber policies pay for:
- Ransom negotiations
- System restoration
- Lost income during the shutdown
3. Small Contractors Are Targeted More, Not Less
Hackers don’t go after the “most sophisticated.” They go after the least protected.
Most contractors:
- Use shared logins
- Lack multi-factor authentication
- Don’t train staff on phishing
- Use personal devices for work
That makes them easier targets, not safer ones.
4. Subcontractor & Vendor Exposure Rolls Uphill
If a subcontractor’s system is compromised and it impacts your project:
- You may still face delay claims
- You may be blamed for failed controls
- Owners increasingly expect cyber readiness
Cyber insurance helps respond to third-party fallout, not just internal damage.
What Cyber Insurance Covers for Contractors
Cyber policies are not generic. When structured correctly, they can address real construction exposures:
- Ransomware & Cyber Extortion
Negotiation, payment, and system recovery costs
- Funds Transfer Fraud & Social Engineering
Protection when wiring instructions or payment requests are manipulated
- Business Interruption
Lost income and extra expense caused by system downtime
- Data & System Restoration
Rebuilding corrupted or deleted files, plans, and records
- Incident Response
Forensics, legal counsel, and notification costs
- Third-Party Liability
Claims arising from compromised client or project data
Common Contractor Cyber Claims
Email Compromise
An office manager receives an email appearing to be from the GC requesting updated wiring instructions. Funds are sent to a fraudulent account. Loss: $185,000.
Ransomware Lockout
A project manager opens a malicious attachment. Estimating, scheduling, and accounting systems are locked days before a major draw request. Project delays trigger penalties.
Payroll Failure
A cyber attack disrupts payroll processing. Crews are not paid on time, causing walk-offs and job delays.
Why Cyber Is Often Missed (and Why That’s Risky)
Many contractors believe:
- “We don’t store sensitive data”
- “We’re too small to be targeted”
- “Our IT company handles that”
The reality:
Cyber losses often fall
between coverage lines, leaving contractors exposed with no recovery path.
Our Approach to Cyber for Contractors
We don’t push generic cyber policies.
We:
- Evaluate how your company actually operates
- Identify where money, data, and schedules are exposed
- Align cyber coverage with your real workflows
- Coordinate cyber with crime, E&O, and contractual obligations
The goal isn’t to scare contractors — it’s to
prevent uninsured shutdowns.
Frequently Asked Questions About Cyber Insurance for Contractors
Do contractors really need cyber insurance?
Yes. Most cyber claims involving contractors do not involve stolen personal data. They involve email fraud, ransomware, payroll disruption, and locked project files. If your business uses email, cloud software, or electronic payments, you are exposed.
We don’t store credit cards or medical records. What’s the risk?
Cyber risk for contractors is operational, not regulatory. Common losses include:
Fraudulent wire transfers
Ransomware shutting down estimating, scheduling, or accounting systems
Loss of access to plans, specs, and project documentation
Payroll failures and delayed payments
None of these are covered by general liability or property insurance.
Aren’t small contractors less likely to be targeted?
No. Smaller contractors are often more likely to be targeted because they typically lack advanced security controls. Cybercriminals look for easy entry points, not company size.
Does my general liability or crime policy cover cyber losses?
In most cases, no.
General liability excludes electronic data and cyber events
Property policies do not cover ransomware or system restoration
Crime policies often exclude social engineering or have very limited sublimits
Cyber insurance is designed to fill these gaps.
What is social engineering or funds transfer fraud?
This occurs when criminals impersonate:
Owners
General contractors
Subcontractors
Vendors
They manipulate emails or payment requests, causing funds to be sent to fraudulent accounts. These losses can be significant and are commonly uninsured without a properly structured cyber policy.
How would a cyber incident affect an active job?
A cyber event can:
Prevent access to schedules, plans, and change orders
Delay draw requests and progress payments
Disrupt payroll and vendor payments
Lead to project delays and potential contractual penalties
Cyber insurance can help cover income loss and recovery costs during the disruption.
What information is needed to evaluate cyber coverage?
Typically:
Annual revenue
Number of employees
Use of electronic payments and wiring
Cloud software and remote access
Basic cybersecurity practices
We focus on understanding how your business actually operates, not forcing you into unnecessary complexity.
Coverage availability, terms, and conditions vary by insurer and policy form. All coverage is subject to underwriting approval and the actual policy language.
