Short answer: A cyber insurance policy protects your business against financial losses and operational disruptions caused by cyberattacks such as hacking, ransomware, and data breaches. It typically covers recovery costs, legal assistance, and potential compensation claims. In a time of increasing digital threats, cyber insurance can be a valuable investment for both small and large businesses.
Have you considered applying for cyber insurance?
Experts say it’s no longer a question of if, but when your company will be affected by a breach. Considering the high risk and potentially devastating consequences of a data breach or cyber-attack, more and more companies are turning to cyber insurance for protection. But is it something small businesses really need? Does your company meet the criteria to qualify for cyber insurance? What do cyber insurance companies want from clients?
Let’s look at what cyber insurance can offer SMBs and what insurers will want to know about your company before approving you for cyber insurance.
Did you know that data leaks that include personal data lead to customer loss and impact on business sustainability?
Ponemon Institute
What does cyber insurance cover?
A cyber insurance policy can provide you with a range of coverage options to help protect you from data breaches and other cyber security issues. Cyber insurance is also called cyber risk insurance or cyber security insurance. It will usually cover cyberattacks and data breaches that involve sensitive customer information, such as Social Security numbers, credit card numbers, account numbers, driver’s license numbers and health records.
Cyber liability coverage may include:
- The cost of investigating a data breach
- The cost of notifying your customers and the authorities
- Legal fees and compensation costs in case you get sued
- Legal fees if you face penalties by local or international authorities
- Some regulatory penalties and fines
- The costs of restoring lost data, systems, and your website
- Income lost and extra expenses if your business is interrupted
- PR/restoring your reputation and managing customer relationships
Make sure you read the details of your policy to see what it covers.
Start your privacy cleanup with the big picture
A GDPR Risk Assessment gives you a complete overview of files containing privacy risk in your company.
Who needs cyber insurance?
All companies keep business secrets of one kind or another, and therefore almost all companies will be able to benefit from cyber insurance. But any business that collects, stores and manages people’s personal data online, including contact information, sales records, credit card numbers, ID numbers and other personal information, could be particularly vulnerable in the event of a cyber attack.
Do small businesses need a cyber insurance?
The short answer is yes. Small and medium-sized businesses are currently among the most vulnerable targets for cyberattacks. Not because they are especially high-value, but because they often have weaker protection and fewer resources to respond quickly and effectively. Most small businesses lack a clear plan for what to do if their systems are locked, data is leaked, or email accounts are compromised.
Cyber insurance cannot prevent the attack – but it can give you access to expert support and cover the costs when damage occurs. It acts as a safety net and can make the difference between a quick recovery and a full-blown business crisis.
What requirements do insurers have for taking out a cyber insurance policy?
Before you can acquire a cyber insurance, insurance companies will make demands on your company when it comes to protecting personal data and your company’s IT security. As a company, you should be in control of your data policies and have procedures in place to protect personal information and software that supports your efforts. Here are examples of what insurance companies can demand:
- Antivirus software
- Continuous system updates
- Firewalls
- Regular backup of data to external media or a secure cloud service
- Access control
- Multi-factor authentication
- An emergency plan in the event of a data breach
- Securing physical IT equipment
- Awareness training
Insurance companies may deny you coverage if you do not make sufficient efforts to protect your sensitive data.
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What scenarios will not be covered by a cyber insurance?
Your policy may exclude preventable security issues caused by human error and careless mishandling of personal data. The scenarios cyber insurance may not cover can include:
- What is covered and not covered by cyber insurance?”>Current or past breaches and incidents
- What is covered and not covered by cyber insurance?”>Incidents caused by employees or insiders
- What is covered and not covered by cyber insurance?”>Problems caused by existing issues you’ve failed to correct
FAQ about cyber insurances
1. How much does cyber insurance cost?
The price depends on your company’s size, industry, and the level of coverage. Some policies start at around £10 per month.
2. Is cyber insurance only relevant for large companies?
No, small and medium-sized businesses are often more vulnerable and have fewer resources to deal with attacks, making cyber insurance especially relevant.
3. Does the insurance cover all types of cyberattacks?
Coverage varies, but most policies include protection against hacking, ransomware, data breaches, and business interruption. It’s important to review the policy details carefully.
4. How do we choose the right cyber insurance?
Consider your business’s risk profile, existing security measures, and specific needs. Consulting an insurance advisor can be a smart move.
Software as protection and as qualification
Although you are not required to use specific privacy software to qualify for insurance, using such tools is a great way to show insurers that you are doing your part. And automating your personal data management tasks reduces the risk of common human errors that could cause breaches and disqualify you from coverage.
At Safe Online, we develop tools that include log files and documentation so that you can demonstrate that you are a responsible data controller. Our tools are:
DataMapper – Find your sensitive data
ShareSimple – Send and receive data securely in Outlook
RequestManager – Process data subject requests easily
Learn more
Sebastian Allerelli
Founder & COO at Safe Online
Sebastian is the co-founder and COO of Safe Online, where he focuses on automating processes and developing innovative solutions within data protection and compliance. With a background from Copenhagen Business Academy and experience within identity and access management, he has a keen understanding of GDPR and data security. As a writer on Safe Online's Knowledge Hub, Sebastian shares his expertise through practical advice and in-depth analysis that help companies navigate the complex GDPR landscape. His posts combine technical insight with business understanding and provide concrete solutions for effective compliance.
