I would've thought that this is the #1 requested insurance for businesses. However, I cannot find much information if such insurance exists. Errors and Omissions insurance does not cover security breaches & data loss.
Any suggestions if a company is able to purchase such an insurance? If not, what are the usual options that companies take in order to protect themselves from potential litigation?
Insurance Security Data Protection
You could talk to an insurance broker about this. It is certainly true that a large commercial insurer would be able to cover this. For example, any of the main underwriters that deal with business insurance at Lloyd's of London, in the UK.
Of course, you may not like the premium and the conditions, but it is certainly possible to get the cover.
You're looking for what is generically called Tech E&O. A number of companies offer it. I know The Hartford calls it "FailSafe Technology Liability" and the items you are concerned about are under their "Tera" level of coverage. http://www.hfpinsurance.com/pr/pr020917.htm
There are products out there that provide fraud and data breach coverages as additional coverages on both tech e&o and some crime policies. All depends on the limit you are looking for.