Skip to content

How Much Does Cyber Liability Insurance Cost? (2022 Rates)

According to a recent study, two out of five cyber attacks are targeted at small businesses. More than half that were a victim of one were put out of business because of it. How can you prevent this from happening to you?

Implementing sound cyber security procedures is one way. However, no level of protection is perfect, especially since cybercrooks are always trying to stay one step ahead of the best security protocols. 

That’s why smart small business owners get cyber liability insurance coverage. It protects against most digital security risks faced by them. This article will explain how much cyber liability coverage costs, the value it provides to small businesses, and what you need to know to get the proper coverage.

How much does cyber liability insurance cost?

Cyber liability insurance covers expenses resulting from data breaches and cyberattacks. The average cost of cyber liability insurance for small businesses is $152 per month, which comes to $1,824 per year.

30% small business owners pay less than $1,000 per year for cyber liability insurance, and another 36 percent pay between $1,000 and $2,000 per year. The rest spend more than $2,000 annually on coverage.

These are just the averages. Your quotes and rates will be different. Be sure to shop around with a few carriers or work with a top broker like CoverWallet, Simply Business, ez.insure, or commercialinsurance.net to get and compare several quotes before making your final decision.

How much does cyber liability insurance cost by different industries?

Cyber liability insurance cost varies significantly by industries since companies in some industries handle and store in their system more sensitive financial information and data than others. It makes sense that these companies have to pay a lot more in cyber insurance premiums than others.

To illustrate the significant difference in cyber liability insurance cost among the industries, below are the average annual premiums for the 5 most expensive industries and the 5 cheapest industries:

Average cyber liability insurance costs 
5 industries with the most expensive average cyber liability insurance cost 
Payment processing $2,510 per year   
Financial services $2,489 per year 
Investment services $2,358 per year 
Law firms $2,320 per year 
Insurance $2,280 per year 
5 industries with the cheapest average cyber liability insurance 
Transportation & logistics $920 per year 
Administration services $992 per year 
Manufacturing & industrial $1,028 per year 
Auto dealers $1,120 per year 
Constructions & contractors $1,185 per year 

What impacts the cost of cyber insurance?

Cyber liability insurance cost is determined by different factors, including coverage limits, deductibles, and the amount and type of sensitive data your company handles, the nature of the business. We are exploring a few factors in details below:

Industry – how much cyber risks your business face

The cost of cyber liability insurance depends on the cyber risks you face.

Network security companies, IT consultants, and other companies responsible for their clients’ cybersecurity usually pay more for cyber liability protection than a small business covering a limited number of digital records. They need third-party cyber liability insurance, which protects them if clients blame their cybersecurity providers for failing to prevent a hack, data theft, or other incidents.

Most businesses need first-party cyber liability insurance. It protects them against their own cyber security risks. Companies that handle a great deal of sensitive customer, employee, and vendor information, such as credit card numbers, Social Security numbers, and health information, typically pay more for this coverage than organizations that store less data. For instance, healthcare professionals that access and maintain patient medical records and retail stores that collect and hold on to customer payment information will have higher premiums than a small decorating business with a few clients and one or two employees.

Your business’s revenue and size

The more revenue your business generates, the more attractive your business is in the eyes of hackers. Hackers’s goal is to get paid by the companies they hack. Of course, they wouldn’t be interested in hacking companies without any revenue. The more revenue and profit your business, the more likely your business becomes target for hackers.

The more employees you have, the higher the chance of having one employee make a mistake to put the company’s data at risk or compromise security is.

Your security measures

Insurance companies reward companies with good security system in place with lower premiums. Companies with few security measures in place and pay little attention to security protocols will have to pay higher premiums since they represent high risks to be hacked. Make sure you have robust security measures in place and offer regular ongoing training to your employees about security risks and best practices to prevent security compromises.

How do policy limits affect cyber liability insurance prices?

If you select a policy with higher coverage limits, you will pay more for insurance than buying one with a lower limit. The cost of a policy is heavily influenced by the amount of cyber coverage you purchase.

Policy limits include:

  • A per-occurrence limit is the amount your insurer will pay on a single claim
  • An aggregate limit is the amount your insurer will pay during the policy’s lifetime, usually one year.

Cyber liability policies have limits that range from $1 million to $5 million or more. Your insurance agent or representative at your business insurance company can advise you on how much coverage you need.

Which cyber liability insurance policy limit do most small business owners select?

Just over half of the small companies that Insureon sells cyber liability insurance to choose a policy with a: 

  • $1 million per-occurrence limit
  • $1 million aggregate limit
  • $1,000 deductible.

Other standard limits small business owners choose are $2-, $3-, and $5-million. Businesses that face high risks typically choose higher policy limits to cover the costs of cyber thefts, data breaches, and other virtual security issues.

In the end, the level of cyber liability coverage your business needs depends on:

  • Your industry
  • Type of business
  • Amount and type of personal information or customer data you handle
  • The cybersecurity protections you have in place
  • The insurer and how they calculate policy prices.

How can I save money on cyber liability insurance?

In addition to choosing a lower policy limit and a higher deductible, you can keep costs down by:

Shopping for coverage.

Different insurance companies assess risks differently. Don’t settle on the first quote you receive. It is highly likely that you are leaving money on the table if you do so. Get quotes from multiple insurers or work with a top broker like CoverWallet, Simply Business, ez.insure, or commercialinsurance.net to get and compare several quotes to find the right cyber coverage for you at the cheapest possible price.

Preventing cyber incidents

Leverage the latest systems and technology to keep cyber breaches from happening. Many insurers will lower your premiums if you take preventative measures. Plus, you’ll keep costs low if you don’t make claims on your insurance. For example, you might:

  • Make it a point to regularly change your passwords
  • Invest in secure equipment and software
  • Teach the people who work for you how to recognize and avoid malware and phishing schemes.

Pay your annual insurance premium upfront

Insurers typically allow you to choose whether to pay your cyber liability insurance premium monthly or at once when you get your coverage or renew it. While it may be tempting to go with monthly payments because they require less cash upfront, many insurance companies offer businesses a discount for paying the entire premium in full.

Get more coverage from a single insurer

Many insurance companies offer discounts if you get more types of coverage from them.

What is cyber liability insurance?

Cyber liability insurance protects small businesses against expenses resulting from a data breach or cyber attack. It covers:

  • Costs to notify customers and clients about an incident
  • The expense to provide credit monitoring services for impacted parties
  • Legal fees and settlements if you’re sued over a cybercrime
  • Fines
  • Public relations costs to restore the reputation of your business.

Why do small businesses need to get cyber liability insurance?

Cyberattacks and data breaches are costly, and they happen more and more often every year. Small companies may have poor cybersecurity protection, making them attractive targets for thieves. In more than half the cases, businesses are forced to shut their doors after a cyber security attack.

Cyber coverage helps your business recover from financial losses resulting from cyberattacks and data breaches. 

If your business handles and stores sensitive information, like credit card or social security numbers, you need cyber coverage.

Why are cyber incidents so costly?

Many small businesses never get cyber liability insurance because their owners don’t think they’re at risk of a hack. Sources report that more than two out of five cyber incidents happen at smaller organizations. The cost of these breaches to small companies often approach or exceed six figures. That is usually enough to close a small business down.

Here’s how cyber costs can add up:

  • A cyberattack shuts down the software a retailer depends on for customer payments. The company misses four business days of work — and revenue — while it’s unable to complete transactions. Cyber liability protection can pay for the business interruption expenses and revenue losses resulting from the cyber incident.
  • A client sues a cyber security business for failing to prevent a ransomware attack. The court rules that the security business must pay the ransom demand needed to recover the data, in addition to covering legal defense costs and damages. Cyber insurance would pay some or all of these expenses.
  • A data breach exposes the sensitive health, insurance, and payment information of hundreds of patients at a clinic. The clinic has to pay for a credit monitoring service for all their patients for several years, costs to communicate with patients about the issue, and for a public relations campaign to fix the clinic’s damaged reputation. Cyber coverage would help pay for these professional services.

These are examples of incidents that could put a small company out of operation if they don’t have cyber liability coverage.

What kind of data can get hacked?

Businesses that purchase cyber coverage handle:

  • Credit card, debit card, and bank account information
  • Healthcare information
  • Social Security or driver’s license numbers
  • Customer names, email addresses, phone numbers, and addresses.

If you handle or store this type of information, you should consider cyber coverage.

What does cyber liability coverage pay for?

Cyberattacks are costly and can take a long time to recover from. 

A cyber insurance policy can pay for:

  • Notifying impacted parties. Failing to do so could result in steep fines and penalties.
  • Investigating and fixing security flaws. This includes putting new security protocols in place.
  • Credit monitoring services. It could be necessary to provide this service to affected customers, employees, and vendors for several years.
  • Lost business. Some policies will pay back lost income and profit due to a hack.
  • Communications and image renewal. You may need to hire a public relations or communication firm to repair the reputation of your business after a hack.

Which type of cyber liability insurance do I need?

Cyber liability insurance comes in two forms.

First-party coverage

This helps pay expenses when your business network is breached, or your data is stolen. It can cover:

  • Cyber ransom payments
  • Hiring experts to investigate the breach
  • Support with regulatory compliance
  • Notifying impacted customers, clients, employees, and vendors
  • Customer credit and fraud monitoring services
  • Crisis management and public relations support
  • Business interruption expenses, including hiring additional staff and renting replacement equipment.

Third-party coverage

This provides protection when a client sues your organization for failing to prevent a breach at their business. Third-party cyber liability insurance can cover:

  • Legal costs
  • Settlements
  • Judgments
  • Court costs.
  • Third-party coverage, because it offers broader protection, is usually more expensive than first-party.

Best cyber liability insurance companies

Cyber liability insurance is often an add-on to your other business insurance coverage. However, you can shop for it as a stand-alone policy. If you do, it’s essential that you get quotes from multiple insurers. Because of all the variables that go into calculating cyber liability insurance premiums, it’s important to compare quotes from different insurers to make certain you get the right coverage for you at the best possible cost. Here are our recommendations of the best cyber liability insurance companies and the best data breach insurance companies for your consideration.

Click to rate this post!
[Total: 0 Average: 0]
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest

No comment yet, add your voice below!


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: