Cyber Insurance

Cyber insurance is a specialized policy designed to cover the financial consequences of cyber incidents, including data breaches, ransomware attacks, business email compromise and system failures that disrupt operations. Unlike general liability or property insurance, which exclude most digital losses, cyber insurance addresses the unique risks that come with storing customer data, relying on computer systems and conducting business online. It won't prevent attacks or replace strong security practices, but it covers the financial fallout when incidents occur.

A policy is built from two main types of cyber insurance coverage that work together to address different types of losses:

• First-Party Coverage: Pays for your business's direct costs after a cyber incident, including forensic investigation to determine what happened, data recovery and system restoration, business interruption losses during downtime, ransomware payments and extortion response, customer notification and credit monitoring services, and crisis management and public relations expenses.
• Third-Party Coverage (Liability): Protects against claims from customers, clients or regulators who allege your business caused them harm through a data breach or security failure, covering legal defense costs, settlement payments, regulatory fines and penalties where insurable by law.

Most comprehensive cyber policies bundle both first-party and third-party coverage, though limits, sublimits and waiting periods vary by insurer and affect how much protection you actually receive when filing a claim. A common mistake is buying coverage with adequate headline limits but sublimits too low to cover a real ransomware or breach event.

Learn More: What Does Cyber Insurance Cover?

Learn More: Types of Cyber Insurance Coverage

Any business that stores customer information, processes payments electronically or relies on computer systems to operate has cyber risk exposure that warrants coverage. Business size matters less than data sensitivity and technology dependence, since cybercriminals target small and mid-sized companies as often as large enterprises. 

Businesses that operate entirely offline with no customer data have lower exposure, though most companies today carry at least some digital risk.

Your business likely needs cyber insurance if you:

• Store customer names, emails, phone numbers or addresses
• Process credit card payments or manage financial data
• Keep electronic health records or other sensitive personal information
• Use cloud services, email or internet-connected systems for daily operations
• Have employees who access company systems remotely
• Work with third-party vendors who have access to your data or systems
• Would experience revenue loss if your systems went offline for days or weeks

Industries with the highest cyber risk exposure include healthcare, financial services, retail, professional services and technology companies, though businesses in every sector experience cyberattacks. Contracts with larger clients or partners increasingly require proof of cyber insurance before work begins.

These resources can help you determine if cyber insurance applies to your business:

• Do You Need Cyber Insurance?
• Cyber Insurance Requirements

Cyber insurance costs average around $999 per year for small businesses, though actual pricing varies based on your industry, data volume, security controls and claims history.

Cost is primarily influenced by the following factors.

Once you understand your cyber risk exposure and average costs, choose coverage limits and policy terms that match your needs. Cyber policies vary more than traditional business insurance, so comparing terms across insurers matters as much as comparing price.

Use this step-by-step process to determine how much cyber insurance you need.

Your next step is comparing cyber insurance providers to see how coverage terms and pricing vary for similar protection levels. This guidance addresses common situations.

If you are ready to compare cyber insurance quotes, select your industry and state to get a customized cyber insurance quote from top-rated providers.