How much does cyber liability insurance cost?
The average premium for cyber liability insurance is about $129 per month. Your exact cost will depend on several factors, including the type of data you handle and your policy limits.
What do small businesses pay for cyber liability insurance?
On average, cyber liability insurance costs $129 per month for small business owners. Annual premiums range from $400 to over $8,000.
Our figures are sourced from the median cost of policies purchased by TechInsurance customers from leading business insurance companies. The median provides a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.
Premiums largely depend on the amount of personal information that your business handles and whether your company takes steps to prevent data breaches and cyberattacks. Additional factors include your business location and revenue.
Common cyber insurance premiums for TechInsurance customers
TechInsurance customers pay an average of $129 monthly for a cyber insurance policy. Annual premiums for small businesses range from $400 to over $8,000.
41% of TechInsurance customers pay less than $100 per month for cyber liability insurance, while another 26% pay between $100 and $200 monthly.
Costs vary for businesses depending on their industry risks and the type and amount of coverage they elect to carry.
Key factors that affect cyber insurance costs
Cyber liability insurance covers the high costs resulting from a data breach or cyber extortion, including credit monitoring expenses, regulatory fines, and legal fees.
When looking into cyber liability coverage, understand that it’s all about scale and risk. Insurance companies consider basics like the size and location of your business. They also weigh additional factors when calculating the cost of cyber insurance, such as:
Policy limits
How much business coverage do you need? Typical cyber liability policy limits range from $1 million to $5 million or more. If you choose a policy with higher coverage limits, you’ll probably pay higher cyber insurance premiums. Companies that face higher cyber risks often elect for higher coverage limits.
Policy limits include both a per-occurrence limit and aggregate limit. The occurrence limit is the maximum amount an insurer will pay for a single claim. The aggregate limit is the total amount an insurer will pay during a policy year.
Depending on the scale and severity of a cyberattack and the cost of breach response and data recovery efforts, settlements or judgments could easily top six figures. Evaluate your business risk to determine how much cyber liability insurance you need.
Deductible
Consider out-of-pocket costs. The deductible is the amount you must pay before your coverage kicks in. Cyber liability policies with $1 million policy limits have a deductible ranging from $1,000 to $2,500 for TechInsurance customers.
Higher deductibles make your policy less expensive, but it's important to choose a deductible you can easily afford. If you can't cover the deductible in the event of a claim, your insurance won’t activate to cover the remainder.
The cheapest option isn't always the best one. Find a policy that will keep your business safe from the slyest cybercriminals and hackers. Our agents can help you adjust deductibles and limits to fit your needs and budget.
Amount of sensitive information you handle
The type and volume of data you work with directly affect data breach insurance costs.
If your business stores minimal records, your costs will be low. For example, a small data analysis firm will pay less than a large managed service provider that handles significantly more customer information.
If you’re storing large volumes of sensitive customer details like personal information, credit card numbers, Social Security numbers, or medical records, your cyber insurance policy will cost more as you are at a greater risk for cybercrimes.
The cheapest option isn’t always the best one. Find a policy that will keep your business safe from the slyest cybercriminals and hackers.
Industry and profession
Your industry and the type of work you do can affect your security vulnerabilities and, in turn, lower or raise your cyber liability costs. High-risk businesses, particularly those in cybersecurity, can expect higher premiums.
IT consultants, MSPs, and similar businesses often need tech E&O instead of standard cyber insurance, which accounts for why IT businesses pay an average of $179 per month compared to other, less risky businesses.
Non-tech businesses, such as landscape designers or restaurant owners, should carry cyber insurance as well. This is particularly true if they use point-of-sale (POS) systems, make digital transactions, or store electronic client records.
Businesses of all sizes and industries process and store some amount of customer data. However, certain industries and businesses face a greater threat of cyberattacks, including phishing and ransomware, targeting their own data as well as their clients' data.
Below you can find the average cyber insurance costs for a variety of industries:
Type of cyber insurance purchased
Depending on your industry and level of risk, you may need additional coverage beyond the standard cyber liability policy to address potential financial losses and legal costs.
Most businesses only need to worry about their own data and their customer data, which requires a first-party cyber liability insurance policy, also called data breach insurance.
If you and your employees are responsible for other businesses' data, you may want to consider third-party cyber liability insurance, which would protect your business if a client sues over a data breach caused by your business.
An example of this is a public relations (PR) or other media agency that has access to their clients' private data. If the PR agency were to suffer a data breach due to inadequate cybersecurity measures, its clients could sue it.
A third-party cyber liability policy would protect them from the legal costs associated with the lawsuit.
Third-party coverage is usually bundled with errors and omissions insurance in a package called tech E&O.
Data breach coverage is generally affordable for small businesses with minimal risks. Tech E&O is often less expensive than purchasing cyber coverage and E&O insurance separately.
Number of employees with access to sensitive data
If more of your people have access to sensitive information, then be prepared to pay more for your coverage.
Underwriters assume that the more access points your business has to sensitive data, the greater the risk of a security breach or successful social engineering attempt. If possible, limit data access to keep insurance costs down.
Cybersecurity risk management measures
Your risk management strategies can directly impact your insurance rates. Education, training, and safety measures help prevent cybersecurity incidents.
Having the right cybersecurity measures in place can help your employees avoid inadvertent data breaches. That might include:
- Utilize firewalls to block potential threats.
- Keep software up to date to reduce vulnerabilities.
- Install multi-factor authentication (MFA) to enhance account security.
- Introduce a formal bring-your-own-device (BYOD) policy.
Keeping information safe helps eliminate headaches and financial risks down the road and keeps your insurance premium low.
Claims history
Any insurance claims you’ve made in the past on your cyber liability insurance policy will likely result in higher premiums in the future.
For example, a cleaning business employee opens an email attachment from a client, but it turns out to be a hacker. The business has to file a claim under its cyber policy to cover data recovery and customer notification costs.
Because of their claim, the small business owner notices an increase in their cyber insurance premium the following year.
Does my company need cybersecurity insurance?
Small business owners often think they wouldn't be targets of cybercrime as often as larger businesses, so they choose not to carry cyber insurance. However, the vast majority of cyber claims come from smaller and mid-sized businesses.
Examples of how your business can be impacted by a cyber incident:
- A cybersecurity company fails to prevent a cyber attack on a client's business. The consultant has to pay the cyber extortion demand required to recover the client's data, on top of attorney's costs and other legal fees.
- A retail shop experiences a data breach, compromising the personally identifiable information (PII) of thousands of customers. The business has to pay for credit monitoring for all impacted customers for several years, in addition to other costs associated with the state-required notification of each customer.
- A bad actor hacks into a SaaS company and deletes crucial infrastructure, causing significant downtime for their clients. The company has to shut down their software temporarily while the issue is resolved.
As you can see, cyber insurance is an important part of risk management for businesses of all sizes that handle sensitive information. Fortunately, cyber insurance covers crisis management and the business interruption caused by the outage, including lost income.
How can you save money on cyber liability coverage?
Cyber liability insurance premiums increased following a surge in remote work after the pandemic. However, costs have leveled out and even dropped in recent years.
More insurance companies than ever are offering cyber coverage (which means more competition), and small businesses are working to protect themselves and lower their rates.
Make annual payments
Most insurers let you decide whether to make your insurance payments once a month or once a year. It’s tempting to make monthly payments because it’s more budget-friendly, but you can usually get a discount if you pay the entire premium cost up front.
Bundle policies
Small businesses in the IT sector may be able to bundle cyber liability insurance with their errors and omissions coverage in a technology errors and omissions policy, sometimes also called tech professional liability insurance.
Additionally, many small business owners choose to bundle their general liability insurance policy with a first-party cyber insurance to protect against cybersecurity risks.
Generally, bundled policies cost less than purchasing the coverages separately.
Take steps to improve security measures
Most insurers will evaluate your network security efforts before they insure you. The stronger your security, the less you’ll pay for cyber insurance coverage.
A good risk management plan to lower your cyber risks and your premium includes:
- Encrypting files
- Using VPNs and firewalls to prevent ransomware
- Verifying users with multi-factor authentication
- Training employees to follow strict security practices to avoid cyber incidents
- Hiring third-party firms to conduct security audits
Liability claims can be a threat to your business. If you’re accused of injuring someone, damaging property, or causing other harm it could easily turn into a costly lawsuit. That’s why it's important to have the right insurance protection in place to cover a range of potential liability risks.
How do you buy insurance with TechInsurance?
TechInsurance is a trusted insurance expert for small businesses, including contractors, consultants, and others, with extensive knowledge of the IT sector. We help business owners compare quotes from top-rated providers, buy policies based on your business needs, and manage coverage online.
By completing TechInsurance's easy online application today, you can compare free quotes for cybersecurity insurance and other types of insurance from top-rated U.S. carriers. Our insurance agents are available to help answer any questions you may have.
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 for your small business.
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Learn more about other business insurance costs
Insurance premiums vary based on the policies a business buys. View our small business insurance cost overview or find out the average costs for other common types of business insurance.