Understanding cyber insurance costs is essential for companies seeking maximum protection.
With data breaches averaging $4.35 million, it goes without saying that cyber insurance costs are less expensive than the cost of not staying insured and protected. To add, those figures don’t take into account other business repercussions, such as
- Business closure
- Reputational damages
- Potential imprisonment
- Regulatory compliance fines
With so much at stake, it’s still surprising to learn that 64% of small business owners are not familiar with cyber insurance. To learn more about cyber insurance liability and how much does cyber insurance cost, continue reading on.
What is Cyber Insurance?
Cyber insurance is a form of risk management that can help protect businesses from the financial consequences of data breaches and other cyber incidents.
This insurance is becoming increasingly important as more and more businesses rely on digital technology to store, process, and transmit sensitive information.
The need for cyber insurance has grown in recent years due to several high-profile data breaches and other cyber incidents (like ransomware attacks, phishing, and BEC). In many cases, these events resulted in significant financial losses for affected companies, including:
- Restoring damaged computer systems
- Repairing damage to a company’s reputation
- The costs associated with notifying customers about the incident
While it’s impossible to completely prevent cyber incidents from happening, having appropriate cyber insurance coverage can give your business peace of mind by helping you manage any costs or liabilities that may arise as a result of these incidents.
Additionally, having cyber insurance in place can make it easier to recover from a data breach and continue operating your business without major disruptions.
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How Much Does Cyber Security Insurance Cost?
The costs of cyber insurance can vary depending on several factors, including the type and size of your business, the number of locations you have, and the nature of your operations.
Generally speaking; however, small businesses can expect to pay between $500 to $5,000 per year for cyber insurance coverage. Larger businesses may pay more.
There are also several different types of cyber insurance available that could help protect a business against a wide variety of risks related to data breaches and other cyber incidents.
For example, some may provide coverage for damage to computer systems or stolen customer data, while others may offer protection against lawsuits or regulatory fines resulting from a breach.
5 Factors that Influence Cyber Insurance Costs
Answering the question, “how much does cyber liability insurance cost?” is easier after knowing the factors that impact cyber liability insurance cost. Among the five major factors that impact the average cost that a cyber insurance company may quote includes:
1. The Size and Type of Business
Larger businesses with more complex operations may have higher cyber insurance costs than smaller, simpler businesses. This is largely due to the increased risk of handling sensitive data and operating critical computer systems.
2. The Number of Locations and Employees
Companies with multiple locations or a large workforce may face greater exposure to cyber risks, which could lead to higher cyber insurance costs.
3. The Nature of Business Activities
Businesses that handle sensitive information or operate critical computer systems, such as financial institutions and healthcare providers, are likely to face greater cyber risks and pay more for cyber insurance coverage as a result.
4. Previous Security Incidents or Breaches
Companies that have been subject to data breaches or other cyber incidents in the past may pay more for cyber insurance coverage than those that have not. This is because insurance providers may view these companies as riskier investments, and charge higher premiums accordingly.
5. Availability of Existing Security Measures
Businesses that already have robust cybersecurity systems in place will likely face lower cyber insurance costs than those that do not. This is because insurance providers view businesses with stronger security as less risky and, therefore, more desirable clients.
How to Meet Cyber Insurance Requirements in 6 Steps
Curbing the repercussions of high-risk cyber attacks is easier when large and small businesses can fully expand their cyber liability coverage by meeting requirements. To do this, consider following these six steps:
Step 1: Upgrade Cybersecurity Systems & Protocols
Having effective security measures in place can help you meet the requirements of your cyber insurance policy by reducing your risk of a data breach or other cyber incident. Some key elements to consider include:
- Encrypting sensitive data
- Regularly backing up important data
- Implementing strong password policies
- Training employees on best practices for handling digital information
Step 2: Stay Current With Evolving Cyber Threats and Best Practices
Maintaining a comprehensive understanding of emerging cyber risks can help a company respond more effectively to incidents when they occur, as well as stay ahead of ever-changing threats. Regularly reviewing industry reports and staying abreast of new trends in cybersecurity through online resources or professional training are effective ways to do this.
Step 3: Implement Incident Response Plans
Having a clear, well-practiced plan in place for responding to data breaches and other cyber incidents can help companies meet cyber insurance requirements by ensuring that they can effectively mitigate any damages that result from an attack. This may include:
- Developing a detailed incident response playbook,
- Performing regular security audits and vulnerability assessments
- Identifying backup resources or vendors who can assist, if needed
Step 4: Consider Additional Coverage (As Needed)
Depending on the nature of a company’s operations, an existing cyber insurance policy may not fully cover risk exposure. In these cases, purchasing additional coverage options or specialized policies that address specific needs is often advised.
For example, one may consider purchasing cyber liability insurance or a standalone data breach policy if an existing policy does not offer sufficient coverage in these areas.
Step 5: Maintain Accurate Cybersecurity-Related Expenditure Records
Maintaining detailed records of any money that is spent on cybersecurity measures can help support the claim process if a data breach occurs and an insurer determines that a company’s efforts were insufficient.
Many insurers recommend keeping comprehensive logs of:
- Receipts for services provided by third parties, such as consultants or IT providers
Additionally, having clearly defined internal procedures for documenting any information about possible incidents can be helpful if the situation requires it.
Step 6: Hire an IT Consultant
If unsure about how to best meet cyber insurance requirements, it may be helpful to work with an experienced broker or consultant who can help navigate the process.
IT consultants have a thorough understanding of the various expectations that insurers have regarding cyber insurance policies and know what information is necessary to make a claim in the event of a breach.
They can also assist with identifying additional coverage options that address specific needs and concerns, as well as a guide on implementing effective security measures.
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Estimate Cyber Insurance Costs Today With ProTek
In today’s digital world, to best protect your business you need cyber liability insurance.
More importantly, it’s essential to work with an insurance company that will support your cyber insurance claims. To better navigate these waters, our IT consulting experts at Protek can help.
With more than a decade of business experience and a full slate of IT certifications, our IT consultants are among the best in the industry and can help you cover every corner of your business.
For help finding the best cyber insurance policy, contact us today.