When considering the costs of cyber liability insurance, you need to balance it against the estimated value of an actual cyberattack
Paying insurance premiums to protect your business against all kinds of potential hazards is a standard practice and the logical thing to do. This becomes even more important when you’re dealing with the cybersecurity of your company, the cyber world is a dynamic one, with forever changing risks and security measures. The price tag on security is constantly changing as well.
How much you should expect to pay?
The cost of cyber insurance depends on a multitude of factors. Before setting a budget, you should consider these factors and how they affect the bottom line of your insurance expenses.
- Business size: Larger businesses typically have higher premiums due to their larger customer base, higher revenue, and more extensive digital infrastructure.
- Industry: Certain industries may face higher risks of cyberattacks or have stricter regulatory requirements, resulting in higher insurance premiums. For example, financial institutions or healthcare organizations may have higher costs due to the sensitive nature of the data they handle.
- Security measures: The effectiveness of a business’s cybersecurity practices and risk management measures can influence the premium. Businesses that have implemented robust security protocols and encryption mechanisms may qualify for lower premiums.
- Coverage and limits: The extent of coverage and the limits chosen for the policy can impact the cost. Higher coverage limits and additional endorsements, such as coverage for social engineering or data breach notification costs, can increase the premium.
- Claims history: A business’s claims history, including any previous cyber incidents or data breaches, can affect the insurance premium. Companies with a history of cyber incidents may face higher premiums due to perceived higher risk.
To put this into perspective and set a reference, consider this simple example:
According to the Pavese-McCormick agency, in 2023, an office of 20 employees, with a $2 million policy limit. The insurance premium will be around $5000, and depending on the type of business, an office of this size may be eligible for a discount for the level of information sensitivity. But it will remain around 5 to 6 thousand dollars.
The same company would have paid just south of $4000 in 2019 and less than $5000 in 2020. Just to tell you, the premiums are rapidly rising following the rapidly increasing cyber risks.
Is cybersecurity insurance worth It?
If your business is reliant on the internet, cyber-attacks are a constant risk, it’s no longer a question of “if”, but a question of “when”. You need to be prepared.
The first step to take is, of course, to implement robust cybersecurity measures and practices such as regular software updates, employee training, access controls, and encryption. Although this is essential to protect your data, it’s still not enough to guarantee your business’ safety. That’s why having cyber liability insurance is crucial, it’s the safety net upon which you can confidently fall back on, in case you find yourself on the receiving end of a cyberattack.
Why cyber insurance can be expensive?
It’s always fair to make sure that you get what you pay for. Especially when you’re paying good money for a service. The diverse and rapidly evolving nature of cybersecurity risks obligates cyber liability insurance policies to :
- Be as complex as the risks it deals with.
- Be Highly Customizable to fit a wide range of industries.
- cover a long list of risk assessment and damage management services.
As you can imagine, the combination of these factors drives up the cost very fast.
Despite that, if you see that your business is exposed to such risks, cyber insurance costs shouldn’t stop you from getting one. Just make sure that the policy you get is perfectly compatible with the type of business you’re running and matches the level of potential risk you face every day.
A good cybersecurity insurance policy should provide you with :
- Financial Protection: Cyber insurance can cover costs such as legal fees, investigations, data recovery, notification expenses, and potential liability arising from third-party claims.
- Risk Transfer: Cyber insurance allows a business to transfer some financial risk associated with cyber incidents to an insurance provider. This can help mitigate the potential impact on the business’s finances and operations.
- Incident Response Support: this includes access to incident response services and support from experts in managing the incident, conducting investigations, and implementing response measures effectively.
- Reputation Management: this covers reputation management expenses, including public relations efforts, to help protect a business’s brand and reputation after a cyber incident. This can be valuable in maintaining customer trust and confidence.
- Risk Assessment and Prevention: When obtaining cyber insurance, businesses often undergo a risk assessment process. This evaluation can help identify vulnerabilities and weaknesses in the organization’s cybersecurity posture, leading to improved security measures and risk mitigation.
Your business is probably the main source of your livelihood, don’t let it be under constant threat. Compared to the cost of a cybersecurity breach, or a cyber event, cyber insurance is a very worthwhile investment for your company. Get in touch with the Pavese-McCormick agency and see how we can help you protect your business.