It’s no secret that today’s businesses are driven by data. They often use this data to do their work, serve their customers, and deliver on expectations.
As a result, it is critical that businesses ensure this data is protected at all costs. Even the smallest data breach can be costly. The average cost of a breach was $4.24 million in 2021, the highest overall average seen in the last 17 years.
Failing to prevent these problems can lead to regulatory fines, lawsuits, reputational damage, and in more extreme cases, business closure and imprisonment.
These are risks that small business owners cannot afford to take. However, there is a solution that can protect your business in the event of a cyber incident while keeping your reputation intact.
A cyber insurance policy can protect your organization and its sensitive data from various forms of digital risk. While helpful, it often has many companies wondering exactly how much does cyber insurance cost?
In this article, we’ll discuss cyber insurance costs, and why small businesses should have cyber insurance policies in place to improve their risk management.
What is Cyber Insurance?
Before we examine cyber insurance costs, let’s explore what cyber insurance is. Also known as cybersecurity and cyber liability insurance, cyber insurance is a specialized insurance product that protects companies from a wide range of digital risks. Examples include:
- Hacking attempts
- Destruction of data
- Data loss and / or theft
- Distributed Denial-of-Service (DDoS) attacks
Additionally, a cyber insurance policy helps small businesses cover several costs associated with a cyber incident, including:
- Any applicable or necessary legal fees
- Recovery of lost, stolen, or corrupted data
- Informing clients of a data breach or cyber attack
- Business interruption or income coverage for attack recovery
- Replacement or repair of damaged, compromised, or lost IT hardware
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How Much Does Cyber Security Insurance Cost?
The short answer to this question is that it varies.
Like traditional insurance, there are a wide range of coverage options available, each with differing price points based on your business’s size.
In most cases, the average cost you can expect to pay ranges from $500 to $5,000 per year. However, there are instances where policies can potentially cost tens of thousands of dollars, especially for larger enterprises that have more sensitive data to protect.
Factors That Impact Cyber Insurance Costs
The size of your business is just one of several factors that can determine your cyber insurance costs. Let’s take a closer look at a few others.
1. Your Industry
The industry your business operates in is one of the most significant factors that can affect the cost of your policy. Based on your industry and the amount of data you manage and store, you’ll be placed into one of three different risk categories: high, medium, or low.
2. Data Sensitivity
Every company stores data, but the sensitivity of that data differs based on the type of business you run.
If you are a small business owner, managing a business with a limited staff that only serves a localized clientele, you are considered as a lower risk and can expect to pay a lower cyber insurance premium as a result.
However, if you operate a healthcare facility or hospital where larger amounts of sensitive data is processed and managed daily, your cyber insurance cost will be higher because you would be considered as a high-risk organization.
3. The Strength of Your Cybersecurity
The advantages of having robust cyber and network security policies extend beyond protecting your data. They can also directly impact your cyber insurance premium.
If your company is considered as a high-risk organization that goes the extra mile to ensure the safety of sensitive data, you’ll end up paying less for your coverage if you rely on the following security measures:
- Ensuring readiness for cyber attacks
- Ongoing security training for your staff
- Working with certified cybersecurity experts
- Regularly monitoring your software and hardware
- Developing and implementing a comprehensive security policy
4. The Terms of Your Policy
The amount of your insurance premium often depends on the limits of your coverage and the deductible. Most cyber liability policies have limits ranging from $1 million to $5 million; others may have higher coverage limits.
The deductible is the amount you are responsible for paying in the event of a claim made after a cyber attack that is covered under the terms of your cyber insurance policy.
If you have a lower deductible, you’ll have less to pay. The drawback to that, however, is a higher insurance premium. Be sure to consult with your insurer to determine the best possible options for your deductible.
5. Your Annual Revenue
Believe it or not, your company’s annual revenue is relevant in determining your cyber insurance costs. The greater it is, the higher the likelihood of your business being targeted for a cyber attack or data breach. If your business generates millions in revenue per year, you can expect to pay more for your insurance premium.
How to Meet the Requirements for Cyber Insurance
Cyber insurance costs and your business’s eligibility for coverage are generally determined through a risk assessment.
When considering your company as a candidate for cyber liability insurance, the insurer will require that you:
- Regularly backup your data
- Install anti-virus software on your devices
- Solidify network security with firewall protection
You will also need to actively track access to databases where sensitive data is stored.
Coverage eligibility is also determined by having data access protocols in place and a user authentication process that is backed by strong passwords. Businesses that operate in highly-regulated industries will need to show proof of regulatory compliance
It’s important to remember that given the evolving nature of cyber insurance, these requirements are subject to change. Consult with your insurer to learn more about their requirements for cyber insurance eligibility.
How Much Does Cyber Liability Insurance Cost?
Find out with expert advice from the cybersecurity experts at Tenecom.
Get Assistance From Tenecom
Since 1986, we have helped companies in the Greater Toronto and Vancouver areas stay protected from the latest cyber attacks by providing exceptional cybersecurity solutions.
Our clients have experienced zero ransomware attacks in the past four years while benefiting from 24/7/365 security services and support from our experienced technicians.
Get the advice you need to find the right cyber insurance policy for your needs by contacting us today.