In today’s digital economy, a single cyber attack can financially devastate a business. A cyber insurance policy is essential for managing financial losses after a cyber attack. Comparing cyber insurance quotes from multiple providers allows for a side-by-side evaluation of coverage options. This helps you find a policy that aligns with your business needs and risk management strategy. Terms, coverages, and availability vary by insurer and state.
What Is Cyber Insurance?
Cyber insurance, also known as cyber liability insurance, is a type of business insurance that helps cover financial losses associated with cyber incidents. Policies are typically structured with two main components: first-party coverages, which address your business’s direct costs, and third-party coverages, which respond to certain claims made against you by others.
During the underwriting process, insurance companies will assess your organization’s cyber risks. They often look at your industry, revenue, the volume and sensitivity of the data you handle, and the strength of your network security controls. This evaluation helps determine your eligibility and the potential insurance cost. A strong risk management posture can be a key factor in securing coverage.
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Who Needs Cyber Insurance?
Businesses of all sizes that use digital tools or handle sensitive information may consider cyber insurance. If your business operations rely on computer systems, you could be exposed to cyber threats. The following types of businesses often explore getting a cyber insurance quote:
Professional services: Law firms, consultants, and accountants that handle confidential client data.
Retailers and e-commerce: Businesses that process credit card payments and store customer information.
Healthcare and medical services: Organizations that handle patient data and may have HIPAA compliance needs, where insurable.
Financial services: Companies that manage financial accounts, Social Security numbers, and other sensitive data.
Real estate and property management: Firms that store tenant applications and financial details.
Manufacturers: Companies with connected industrial control systems or automated production lines that could be disrupted by an outage.
Organizations that store personal information: Any business that collects and stores data on employees, customers, or vendors.
Businesses that rely on digital tools: Companies whose daily business operations would halt without access to their computer systems or data.
What Does Cyber Insurance Cover?
A cyber insurance policy can include a range of coverages to address different aspects of a cyber incident. While specific terms and coverage names vary between providers, common components of cyber insurance coverage often include:
Data breach response costs
Covers certain expenses for responding to a data breach, which may include forensic services to determine the scope of the event, legal guidance, customer or patient notification, and offering credit monitoring services to affected individuals.
Business interruption
Reimburses lost income and covers extra expenses incurred to continue business operations during a period of restoration after a covered cyber event causes a system outage. This coverage is often subject to a waiting period and time limit.
Ransomware and cyber extortion
Can cover costs associated with a cyber extortion threat, such as a ransomware attack. This may include payments to hackers where lawful and covered, and the cost of professional negotiators or consultants to manage the incident.
Digital asset restoration
Helps with costs to recover or replace data and software that is corrupted or destroyed by malware or another covered cyber attack. This is also known as data recovery coverage.
Third-party liability coverage
Addresses certain legal defense costs and settlements from claims alleging you are responsible for a third party’s financial losses. This can include privacy liability (for a data breach of sensitive information), network security failures, and media liability (for online content).
Regulatory matters
Can cover certain defense costs and regulatory fines where such penalties are insurable by law and covered by the policy. (Note: Fines and penalties are often heavily restricted or excluded in some jurisdictions.)
Payment card industry (PCI) assessments
Covers certain assessments, fines, or penalties imposed by credit card brands following a breach of cardholder data, where included and permitted.
What Is Typically Not Covered by Cyber Insurance?
Like any insurance policy, cyber insurance has exclusions that limit its scope. It’s important to review your policy documents to understand what is not covered. Common exclusions may include:
Known incidents that occurred or were suspected before the policy’s start date but were not disclosed.
Contractual liabilities your business assumed that are not otherwise covered by the policy.
Bodily injury and property damage, which are typically covered by a general liability insurance policy or a Business Owner’s Policy (BOP), not cyber insurance.
Utility failures or infrastructure outages not directly caused by a covered security failure at your organization.
Certain government-imposed fines or penalties where they are deemed uninsurable by law.
Incidents involving employee-owned devices (BYOD) that do not meet the company’s required security controls.
Losses from fraudulent fund transfers (social engineering) if required verification steps were not followed.
Events resulting from acts of war or other broadly defined infrastructure events, as specified in the policy's exclusions.
What's the Difference Between First-Party and Third-Party Coverage?
Understanding the difference between first-party and third-party cyber insurance coverage is key to evaluating a policy. Each is designed to address different types of financial losses.
First-party coverage helps with your business’s direct costs after a cyber incident. Think of it as coverage for your own balance sheet. Examples include the costs for data recovery, business interruption losses from a system outage, breach response services like credit monitoring, and payments related to cyber extortion.
Third-party coverage, or liability coverage, protects you from claims made by others. If a data breach at your company exposes customer data and those customers sue you, third-party coverage can help with legal fees and potential settlements. This also applies to claims from business partners or regulators.
What Factors Influence the Cost of Cyber Insurance?
The price of a cyber insurance policy is based on an insurer's assessment of your business's unique cyber risks. Several factors can influence your insurance cost, and underwriters weigh them differently. Key factors include:
Industry and data sensitivity: Businesses in sectors like healthcare or finance that handle highly sensitive data often face different risk profiles than other industries.
Revenue and records volume: Annual revenue and the number of sensitive records you store or process can impact the potential scale of a loss.
Security controls: The strength of your cybersecurity measures, such as multi-factor authentication (MFA), endpoint protection, and data backups, is a primary underwriting consideration.
Use of vendors and cloud services: Your reliance on third-party providers for critical business operations can introduce additional vulnerabilities.
Incident history: A past history of cyber incidents or insurance claims can affect your eligibility and price.
Business continuity planning: Having a documented incident response plan and business continuity strategy can demonstrate preparedness.
Selected limits, sublimits, deductibles, and waiting periods: The amount of coverage you choose, the deductible you agree to pay, and other policy-specific values directly influence the final price.
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What Security Controls Do Insurers Require?
When you apply for a cyber insurance quote, providers may ask about the specific cybersecurity controls you have in place. While requirements vary, many insurance companies look for a baseline of security practices to mitigate common cyber threats. Having these controls can be a factor in obtaining coverage. Common examples include:
Multi-factor authentication (MFA): Applied to corporate email, remote network access, and privileged administrative accounts.
Regular backups: Consistent backups of critical data that are stored offline, air-gapped, or in an immutable format.
Endpoint detection and response (EDR): Advanced protection for laptops, servers, and other devices, along with a consistent patching cadence.
Privileged access management: Strict controls over who can access critical systems and data.
Email filtering and user training: Tools to block phishing emails and regular training to help employees recognize social engineering tactics.
Incident response plan (IRP): A documented plan that outlines steps to take during and after a cyber incident, including contact lists for key vendors.
What You Need to Get a Cyber Insurance Quote
To streamline the process of getting a cyber insurance quote, it helps to have key information about your business ready. Insurers use these details to assess your risk profile and provide an accurate price. Common information requested during the application includes:
Business name and entity type: Your legal business name and structure (e.g., LLC, S-Corp).
Industry and data types handled: Your primary business activities and the kinds of data you store, such as customer information, payment details, or health records.
Number of records stored or processed: An estimate of the volume of sensitive data you manage.
Annual revenue: Your company's gross revenue for the most recent fiscal year.
Use of cloud and third-party vendors: Information on your key technology partners, like your cloud provider or payment processor.
Current security controls: Details on your cybersecurity measures, such as MFA, backups, and endpoint protection.
Incident and claims history: Information about any prior cybercrime incidents or related insurance claims.
Desired limits, deductibles, and sublimits: The amount of coverage you are seeking and the deductible you are willing to pay.
How to Compare Cyber Insurance Quotes
Once you receive multiple cyber insurance quotes, it's important to compare them carefully to understand what you are getting. Price is just one piece of the puzzle; the details of the coverage matter most. Here is a step-by-step approach to making an effective comparison.
Step 1: Align limits, sublimits, and deductibles
Ensure each quote is based on the same primary coverage limit, deductible, and any internal sublimits (e.g., a lower limit for cyber extortion). An apples-to-apples comparison of these values is the foundation for an accurate assessment.
Step 2: Review definitions and exclusions
Confirm how each policy defines key terms like "data breach," "system failure," and "ransomware." Seemingly small differences can have a big impact on what triggers coverage. Pay close attention to the exclusions section to understand what is not covered.
Step 3: Check vendor panels and response services
Review the list of approved incident response vendors. Does the insurer give you access to leading legal, forensic, and public relations firms? Understand the process for engaging these breach response services during a crisis.
Step 4: Confirm coverage triggers and waiting periods
Note any differences in what triggers coverage. For business interruption, check the waiting period—the time you must be offline before coverage kicks in—and the maximum period of restoration covered.
Step 5: Consider risk control requirements
Verify if the policy includes any warranties or endorsements that require you to maintain specific security controls. Failure to meet these obligations could jeopardize coverage for a future claim, so it's crucial to confirm you can comply with them.
Frequently Asked Questions (FAQs)
Who needs cyber insurance?
Businesses that handle personal or sensitive data, rely on connected systems for business operations, or must meet contractual or regulatory requirements often compare cyber insurance. Whether it's suitable for your small business depends on your specific operations, risk tolerance, and overall risk management strategy.
What does cyber insurance cover?
A cyber insurance policy can include first-party coverage for your own costs (like breach response and business interruption) and third-party liability coverage for claims against you. All coverages are subject to the policy's specific limits, sublimits, deductible, and exclusions.
Is cyber insurance required by law?
While there is no general federal law mandating cyber insurance for all businesses, certain client contracts or industry-specific regulations may require you to carry it. It's important for policyholders to check your contractual and regulatory obligations.
How much does cyber insurance cost?
The insurance cost for a cyber policy varies widely based on factors like your industry, annual revenue, security controls in place, types of data handled, and the selected coverage limits and deductible. Comparing cyber insurance quotes from multiple insurance companies is a reliable way to understand the potential price.
What is the difference between cyber insurance and Tech E&O?
Cyber insurance focuses on security and privacy events, like a data breach or ransomware attack. Technology Errors & Omissions (Tech E&O) insurance addresses claims of failure in your professional technology services or products. It combines elements of professional liability with cyber liability. Some businesses that provide tech services consider both.
Does a policy cover ransomware payments?
Some cyber insurance policies provide coverage for certain expenses related to ransomware attacks, including extortion payments where they are lawful and covered by the policy. It is essential to review the policy terms and understand any regulatory considerations regarding such payments.
Are regulatory fines covered?
Coverage for regulatory fines depends on the specific policy language and whether those fines are considered insurable under the laws of the relevant jurisdiction. Some policies may offer this coverage, while others exclude it.
Secure Your Business: Start Comparing Cyber Insurance Today
Cyber risks are a growing concern for businesses of all sizes, but they don't have to be a threat to your bottom line. A cyber security insurance policy can be a valuable tool for managing the financial impact of a cyber attack. By comparing quotes from different providers, you can assess your options and choose a policy that aligns with your business needs. Enter your ZIP code to start comparing free quotes from participating providers.
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Important Information
Disclosures and notes
Insurance products presented on HowMuch.net are offered by third-party insurers. Terms, coverages, discounts, and availability for insurance products vary by insurer and are subject to change and state law. Quotes are not guaranteed and are subject to underwriting guidelines and the accuracy of the information you provide. Be sure to review all policy documents carefully, including any endorsements and exclusions, before making a purchase decision. The information on this page is for general educational purposes and should not be considered legal, tax, or insurance advice.
