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Return To: Cyber Insurance – The Ultimate Guide
According to AdvisorSmith, in 2019, the average cost of a cyber insurance policy was $1,485 a year or $124 a month. This amount included a $10,000 deductible for $1 million in coverage.
They based this average on quote estimates from at least 43 insurance companies nationwide.
These insurance companies offered cyber insurance premiums ranging from $650 to $2,357, depending on risks.
If you own a business, getting cyber insurance is worth it.
However, the risks your business faces determine how much you will have to pay.
Before choosing a cyber insurance company, assess the risks your business faces to calculate the price of cyber insurance. Consider several factors to get the most out of your cyber insurance policy.
What Factors Affect Cyber Security Insurance Cost?
Cyber insurance companies consider a couple of business characteristics when determining your policy:
- Industry: Depending on the industry your business falls in, you may fall into low, medium, or high-risk tiers. Different industries belong to different tiers. These tiers factor in the amount of sensitive data that your business handles.
- Data Sensitivity: Different companies handle different amounts of data. For example, you may consider small businesses as low-risk companies since they have a smaller customer base.
Medium-risk companies may store sensitive customer data like credit card information. These businesses would need a more specific cyber insurance policy to protect sensitive data from theft.
High-risk industries like hospitals and public offices incorporate more sensitive data in their systems. These places store sensitive information such as Social Security numbers and residential addresses. They require proper protection.
- Company Size: Cyber-attacks on small businesses are rising. Still, businesses with more employees need more protection because larger companies are at greater risk of phishing or other cyber attacks.
- Annual Revenue: If you have sizeable yearly revenue, your business is at greater risk of cybercriminal activity. Insurers will consider the amount of money your business generates when adjusting the cost of your cyber liability insurance policy.
- Implemented Security Measures: Cyber insurance adjusts your insurance costs if you have anti-cybercrime initiatives in place. Large and high-risk companies may offer cybercrime awareness courses to their employees. Insurance companies favor businesses that implement such practices.
- Policy Terms: The higher your cyber insurance coverage limit is, the higher your premium will be — standard cyber insurance coverage limits per cybercrime occurrence range between $500,000 and $5 million.
What Are the Different Types of Cyber Insurance?
After examining your business, research either first-party cyber insurance companies or third-party cyber insurance companies. Depending on your needs, you’ll find the right protection against cyberattacks that result in expensive financial and intellectual losses.
|First-Party Cyber Insurance||Third-Party Cyber Insurance|
|Protects your business from cyber crimes targeted within your immediate company’s operations. Covers loss of income that results from cyberattacks. Pays for the time to recover lost files or information after suffering a cybercrime.||Protects your institution from threats that target clients, which are linked to your company.Covers legal fees if sued for failure to prevent the cyber crime damages.Pays for government penalties that result from similar claims of negligence.|
What Does Cyber Liability Insurance Cover?
Cyber liability insurance policies protect your business from risks that involve the data you store. Examples of cyber incidents that these policies cover include:
- Data Loss or Corruption: Software or hardware failure may cause your business to lose sensitive data. Cyber insurance may cover the costs to recover such data.
- Business Interruption: Your business operations may experience delays resulting from cyber attacks, especially if it involves data loss. Depending on your insurance policy, it may cover any lost income resulting from cyber attacks.
- Identity Theft: If you’re a homeowner, standard home insurance policies do not cover identity theft. Cybercriminals steal your identity and forge deeds under your name. Cyber insurance covers such cases.
- Cyber Extortion: Some cybercriminals will demand payment, threatening to leak your sensitive information for malicious purposes if you don’t pay. Cyber insurance policies may cover cyber extortion.
- Reputation Recovery: Data breaches are expensive and can damage your company’s reputation. Your cyber insurance policy can cover these damages.
What Are Cyber Liability Risks?
Cyber liability risks are cyber attacks that your company may fall victim to. There are different cyber liability risks, including:
- Hacks: These are the most common cyber-attacks. If someone hacks your business, you might be liable for certain expenses. For instance, if your retail store gets hacked, criminals might steal credit card information. Your third-party cyber insurance policy can cover the legal costs if you’re hit with a lawsuit. Your policy will also cover the other fines linked to hacks and things like public relation costs.
- Malware: Criminals can infect your systems with viruses, trojan horses, worms, ransomware, spyware, and malware. Once these invasive programs infect your system, recovering from damages will be expensive. Cyber extortion cases may fall under malware risks.
- Phishing: Large companies often fall victim to phishing. An unknown employee might click on an unknown link in an email, unknowingly allowing hackers into your system. It’s important to spread cyber crime awareness within your company.
How Much Cyber Insurance Do I Need?
On average, businesses pay almost $1,500 per month for cyber insurance. However, it’s worth it. Cyber insurance ensures that you get protection for your business from several cyber attacks.
If you’re looking to invest in cyber insurance, assess your business and the risks you might face. Cyber insurance companies will determine the cost of your policy according to the type of business you run. For example, if your business operations rely on computer systems, you’ll require special insurance packages that cost more than smaller businesses with less sensitive data.
Every business should invest in a cyber insurance policy, especially during the pandemic where most employees work from home — increasing your risk of falling victim to cybercrimes. Investing in a cyber insurance policy is a must. Assess the business you run to find the cost of cyber insurance you need. Finally, find the best cyber insurance company to fit your needs.