While this kind of insurance is expanding, industry watchers note the growth remains in the early stages. "It's key to note that this (cyber insurance) is still a small and growing area of insurance," Boyer said.
But cyber insurance seems here to stay and grow as companies like Liberty International, Axis, Travelers and AIG are just a few of the bigger companies offering cyber insurance products, Navetta said.
The demand for cyber insurance is becoming so strong, though, that even small providers are entering the mix.
"Coverage started out geared towards online companies. Then more industries, like retailers, wanted it and now it's going down to the local laundromat," Navetta said. "And a lot of smaller players are jumping in."
But just because the demand is there doesn't mean insurers will take on just any business.
Insurance companies still want to know what risks they are taking on—a problem that Boyer's company, BitSight, wants to solve.
BitSight uses big data analytics to determine a company's security risk score, which is basically like a credit score, but instead is used to measure and rank a business's security performance.
Boyer said companies use BitSight for three primary applications.
First, companies use BitSight's scores to determine which third-party vendors and businesses to use and interact with, because they can look at security scores and get a sense of how safe their data will be.
Second, the security scores help companies benchmark themselves against other competitors—and potentially secure an edge among their peer businesses.
And third, insurance companies use security scores to manage their own internal business risks by helping to decide which client businesses to take on, or not.
BitSight recently partnered with the insurance provider Liberty International to give the firm's policyholders access to BitSight's service so that they can always have access to their security score.
"It's great for insurers because they are their reducing risk and it's great for companies because they are more protected," Boyer said. "We are helping both sides systemically reduce risk."
—By CNBC's Cadie Thompson.