Water treatment businesses spend plenty of time thinking about physical equipment, environmental exposures, and the liabilities tied to their work. But an internet-connected control system or a payment request arriving in an employee’s inbox can create an entirely different loss scenario. For insurance agents, evaluating water industry insurance means looking beyond traditional operational exposures and asking how the program would respond when money, data, or systems become the target.

The State of Cyber Risks in the Water Industry

Digital systems now touch multiple parts of a water business, introducing cyber threats. Companies may use these systems to process customer payments, communicate with vendors, maintain records, monitor equipment, and remotely access operational technology.

In July 2026, the Federal Bureau of Investigation and the Environmental Protection Agency (EPA) warned water and wastewater organizations about attacks targeting internet-facing programmable logic controllers. Reported effects included loss of monitoring and control functionality, loss of pressure, and flooding. The EPA also recommends that water systems include cyber insurance in their cyber risk-management strategy.

Operational technology represents only one side of the exposure. A water treatment business may also face phishing, ransomware, cyber extortion, fraudulent fund transfers, and business email compromise. An attacker does not need to manipulate treatment equipment to cause a costly loss. A convincing email can be enough.

Where Coverage Gaps Can Surface

Traditional property and liability policies may not address the financial losses associated with a cyber event. As cybercrime risks in water treatment become part of a company’s risk profile, agents need to consider how a client’s insurance program would respond to both the immediate financial loss from a cyberattack and its potential consequences. 

Consider a water treatment company that regularly purchases chemicals from the same supplier. An employee receives an invoice via email that appears to be from the supplier, with updated banking instructions, and wires a $75,000 payment to the new account. Days later, the real supplier asks about the unpaid invoice.

The company could face losses not only from the stolen funds but also from related expenses, including the costs of investigating the incident and potential operational problems if the legitimate supplier withholds additional shipments. A different type of cyberattack could add system restoration costs, business interruption, or third-party liability.

Reviewing Cyber Protection Needs

Cybercrime should become a standard part of the conversation when agents review water industry insurance. Start with the client’s operations: How does the company transfer money? Who can change vendor payment information? What systems store customer information? Can employees or outside vendors remotely access equipment?

Then compare those exposures against the proposed coverage. Key areas to verify include:

• Fraudulent fund transfers: Determine how the policy responds when criminals redirect legitimate payments.
• Phishing and fraudulent instructions: Check whether deceptive emails or communications that induce employees to transfer money receive coverage.
• Cyber extortion and ransomware: Review available response expenses and applicable conditions.
• Business interruption: Confirm what triggers coverage and how the policy calculates covered losses.
• System and data restoration: Determine whether the policy addresses expenses associated with restoring compromised systems and data.
• Third-party cyber liability: Review protection for covered claims arising from compromised information or system breaches.

Policy language, definitions, sublimits, exclusions, and conditions matter. Reviewing them before placement or renewal gives agents an opportunity to identify gaps while there is still time to address them.

Make Cyber Reviews Part of Every Renewal

A well-rounded water industry insurance program reflects how the client operates today. Digital payment processes, connected equipment, remote access, and electronic records create exposures that cannot be evaluated solely through a traditional property or liability lens.

Agents can provide a more complete risk review by making cybercrime questions part of every placement and renewal. WaterColor Management offers crime and cyber coverage specifically for water and water treatment businesses, helping agents address financial, system, and liability exposures within this specialized industry.

Reach out to WaterColor Management to obtain a quote and discuss the cybercrime exposures affecting your water industry clients.

About WaterColor Management

WaterColor Management has insured the water industry for over 30 years. Our policies include unlimited defense cost coverage in the event of a lawsuit against you. Call us at (855) 929-0824 or email info@watercolormanagement.com for a quick quote for your Water Business Professional, Products/Completed operations, Pollution, and General Liability Insurance.