Cyber liability insurance covers expenses related to data breaches and cyberattacks. Policy costs are determined by factors like your policy limits and how much sensitive data your company handles.
Regardless of policy limits, the median cost of cyber liability insurance is $140 per month (or $1,675 per year) for Insureon small business customers. The median excludes high and low outliers, so it provides a better estimate of what your small business is likely to pay than the average cost.
Many small business owners (27%) pay less than $1,000 per year for cyber liability insurance, and another 36% pay between $1,000 and $2,000 per year. These figures are sourced from an analysis of policies issued to Insureon customers.
Network security companies, IT consultants, and other companies that are responsible for their clients' cybersecurity may pay more for cyber liability coverage. They need third-party cyber liability insurance, which provides protection if a client blames their business for failing to prevent a cyber incident.
Most businesses only need first-party cyber liability insurance to defend against their own cyber risks. Businesses that handle a large amount of sensitive customer information, such as credit card numbers or Social Security numbers, pay more for this coverage.
For example, healthcare professionals with access to patients' medical records and retail stores that collect customers' payment information may have a higher premium.
If you choose a cyber liability insurance policy with higher coverage limits, expect to pay more. The cost of a policy is directly related to the amount of cyber insurance coverage you buy.
Policy limits include both a per-occurrence limit (the amount the insurer will pay on a single claim) and an aggregate limit (the amount the 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.
More than half of the small businesses that purchase cyber liability insurance through Insureon (54%) choose a policy with a $1 million per-occurrence limit, a $1 million aggregate limit, and a $1,000 deductible.
Other common limits are $2 million, $3 million, and $5 million. Businesses that face higher risks may choose higher policy limits to protect against escalating costs.
Overall, the amount of cyber liability coverage your business needs depends your industry, your type of business, and the type of personal information or customer data you handle.
Many small businesses forgo cyber liability insurance because they assume they're low risk. However, a cyber incident can devastate any type of business. In fact, 61% of cybersecurity incidents occur at small businesses, and the average cost of a small business data breach is more than $85,000.
Here's how these costs can escalate at a small business:
A cyberattack brings down the software that a company relies on for customer transactions. The company misses three business days of work while the software is unavailable. Cyber liability insurance can pay for the business interruption caused by the outage.
An IT consultant is sued for failing to prevent a ransomware attack on a client. The consultant has to pay the cyberextortion demand required to recover the client's data, on top of legal defense costs.
A data breach exposes the personal information of hundreds of customers at a small retail shop. The retailer has to pay for a credit monitoring service for all those customers for several years, as well as any costs associated with the state-required notification for each customer. They may also have to invest in a public relations campaign to help fix their reputation.
Cyber liability insurance costs will vary based on several factors. In addition to choosing lower policy limits, these tips can also keep costs down:
Pay the annual premium upfront. You can usually choose to pay your cyber liability insurance premium in monthly or annual installments. While it’s tempting to go with monthly payments because they require less cash upfront, many insurance companies offer businesses a discount for paying the entire annual premium at once.
Manage your cyber liability risks. If your small business has no cyber liability claims history, you could save money on your premium. You can also save money by implementing security measures at your business. For example, you might:
Insurance premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific policy.