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Who needs cyber insurance?
Cyber liability insurance helps protect your small business from the significant financial losses a cyberattack can cause. It covers costs for customer notification, credit monitoring, legal fees, and fines.
What does cyber insurance cover?
From ransom payments to data recovery fees, cyberattacks can take a huge financial toll on a business. A cyber insurance policy helps your small business bounce back by covering the cost of legal fees, credit monitoring services, and more.
Understanding the two types of cyber insurance can help you determine what kind of coverage your business needs.
First-party coverage, also known as data breach insurance, protects businesses from the financial impact of data breaches or cyberattacks, including costs for:
- Notifying customers of a data breach
- Providing credit monitoring to affected individuals
- Recovering compromised data, including ransom payments for cyber extortion
- Cybersecurity specialist services to restore affected systems
- Hiring public relations services to manage any bad publicity
- Supplementing lost income during business interruptions
If a client sues your business for failing to prevent (or causing) a data breach or cyber incident at their company, third-party coverage can pay for lawsuit-related fees, including lawyers’ costs, settlements, court-ordered judgments, and docket fees.
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Who is required to have cyber insurance?
Cybersecurity insurance isn’t required by law, but it’s highly recommended for all businesses. As cybercriminals become increasingly sophisticated and cause greater destruction, they’re turning their sights on more small businesses that are often unprepared and defenseless. Additionally, some professions, such as cybersecurity consultants, may require a policy to sign a client’s contract.
Understanding this increasing threat can help small business owners protect their assets. Below are some key stats highlighting the impact cyberattacks have on small businesses:
- 43%: The amount of data breaches that involve a small company
- 3.4 billion: The daily number of phishing emails sent, primarily to small businesses
- Six months: The time it takes most small businesses to shutter after a cyberattack
- $120,000 - $1.2 million: The average cost of a small business data breach
Securing a cyber liability policy can help your small business protect itself and recover from a devastating breach.
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What to do after a data breach
A data breach response plan can save you time, money, and stress following a cyber incident. Here’s what to do after a data breach to get back to business as usual.
What types of businesses should consider getting cyber insurance?
While sophisticated hackers go after a variety of businesses and industries, certain factors can make a company more vulnerable to cyber crimes. Cyber insurance protection is especially beneficial for businesses that:
Handle sensitive customer data
If your company keeps sensitive information, such as Social Security numbers, credit card information, bank accounts, driver’s license numbers, and addresses, you’re a prime target for a cyberattack. These types of businesses can include:
Operate in a highly regulated industry
Businesses in the healthcare, finance, and education fields must follow strict requirements, such as the Health Insurance Portability and Accountability Act (HIPAA) and Securities and Exchange Commission (SEC) laws, which encourage robust cybersecurity measures. Some of these companies include:
Rely on e-commerce or online platforms
Companies that conduct sales online or operate primarily on the internet have an increased exposure to cyber risks on their computer systems, such as:
Offer technological services or products
Businesses in the information technology (IT) industry that provide services or web-based products are more susceptible to lawsuits if a client or customer suffers a data breach or cyberattack. These tech professionals could be:
Top professions that need cyber insurance
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How much does cyber insurance cost?
Insureon customers pay an average premium of $145 per month for cyber insurance. The cost of cyber liability insurance is based on several factors, such as:
- Amount of sensitive data handled
- Your industry
- Coverage limits
- Number of employees
All of these details are important when understanding how much cyber insurance your small business needs.
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How much cyber insurance coverage does my business need?
Determining the right amount of cyber liability coverage depends on the type of business you own, what industry you’re in, and the kind of customer data you handle.
For example, if your business handles personally identifiable information (PII), such as full names, Social Security numbers, or bank account information, a data breach could bring expensive lawsuits and hefty fines.
Here’s what the average cyber liability insurance policy for small businesses includes:
- $1 million per-occurrence limit
- $1 million aggregate limit
- $2,500 deductible
Costs can vary depending on a handful of factors, including the amount and sensitivity level of the customer PII you store, industry regulations, company size, and cybersecurity protocols.
IT and tech professionals should consider tech E&O, a policy bundle that combines errors and omissions insurance with cyber insurance. This combo policy protects against the risks and legal fees tied to data breaches.
General liability insurance
General liability insurance covers common business risks like customer injury, customer property damage, and advertising injury. It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts.
Business owner’s policy
A business owner’s policy (BOP) bundles general liability insurance with commercial property insurance. It typically costs less than if the policies were bought separately.
Errors and omissions insurance
Errors and omissions insurance (E&O) helps cover the cost of a lawsuit if a client claims your work was inaccurate, late, or never delivered. It’s sometimes called professional liability insurance.
Commercial auto insurance
Commercial auto insurance covers legal bills, medical expenses, and property damage if a business vehicle is involved in an accident.
Workers’ compensation insurance
Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.
What else can a small business do to help improve its cybersecurity?
As a critical part of your company’s risk management, cyber insurance is a great place to start. Having a strong cybersecurity protocol can help protect your business and potentially lower your insurance costs.
Here are a few steps you can take to beef up your cybersecurity:
Enhance access control
- Encourage employees to create strong passwords and update them regularly.
- Enable multi-factor authentication (MFA) that requires users to provide additional identification, such as a code from their phone.
- Limit access to sensitive data and systems to authorized personnel.
- Require a virtual private network (VPN) for remote workers.
Restock your toolbox
- Implement firewalls to prevent unauthorized access to your systems.
- An intrusion detection system (IDS) uses antivirus and other anti-hacking programs to monitor your network for signs of hacking and block potential threats.
- Data loss prevention software monitors data transfers in your network, can restrict access to certain users, and helps detect data leaks.
- Endpoint detection and response software analyzes your network data to watch for threats and notify you when one is detected.
Set employees up for success
- Regularly train employees on cybersecurity best practices, such as spotting potential ransomware attacks, understanding social engineering tactics, and identifying network security vulnerabilities.
- Create company guidelines and monitor activity on company computers and social media platforms.
- Encourage employees to report suspicious activity as part of their daily tasks.
Create a post-breach blueprint
- Implement a detailed data breach response plan that defines what a data breach looks like, outlines necessary steps, and assigns responsibilities for execution.
- Understand your state’s data breach notification requirements to avoid penalties and regulatory fines following a cyberattack.
How do I get affordable cyber insurance?
Get free quotes for cyber insurance from top-rated insurance providers by filling out our easy online application. You can also speak with a licensed insurance agent, who can answer questions and help you find affordable coverage.
Once you find the right policies for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance (COI) for your small business.
Updated: August 15, 2025
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