If you’re in charge of sensitive data and provide cybersecurity services to clients, you should look into cyber liability insurance. This policy costs small tech companies about $145 per month.
Tech companies have different risks, so costs vary for this policy from an average of roughly $1,700 per year to more than $3,000.
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 such as:
The type and volume of data you work with directly affects data breach insurance costs.
If your business stores minimal data, your costs will be low. For example, a data analysis firm that doesn’t store or manage customer information will pay less than a large business intelligence company.
If you’re storing large volumes of sensitive customer data like personal information, credit card numbers, Social Security numbers, or medical records, your cyber insurance policy will cost more.
You’ll also pay more for cyber insurance if a client could blame your business for failing to prevent a data breach or cyberattack.
The cheapest option isn’t always the best one. Find a policy that will keep your business safe from the biggest cyber liability risks.
For example, an IT consultant could recommend database software that gets hacked. Or a cybersecurity firm’s safeguards could get undermined by someone opening a phishing email. In both cases, the client could hold you responsible even though you did nothing wrong.
It’s a simple numbers game. If more of your people have access to sensitive data, then be prepared to pay more for your coverage. The more access points, the greater the risk of a security breach. If possible, limit data access to keep insurance costs down.
Any claims you’ve made in the past on your cyber liability insurance policy will likely result in higher premiums in the future.
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 insurance premiums.
Policy limits include both a per-occurrence limit and aggregate limit. The occurrence limit is the amount an insurer will pay to cover a single claim. The aggregate limit is the total amount an insurer will pay during a policy year.
Not sure which policy limit to pick? Learn how much cyber liability insurance you may need.
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 typically require a deductible of around $1,000.
Check with your insurance company as many are flexible when it comes to adjusting deductibles and limits to fit your budget.
It’s not all about paying more as there are two key ways to keep policy coverage within your budget.
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.
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. Steps you can take to lower your cyber risks and your premium include:
Liability claims can be a threat to your tech 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.
Remember that the cheapest option isn’t always the best one. Find a policy that will keep your business safe from the biggest cyber liability risks.
Like all good business decisions, look first for what you need at a price you can afford. Make sure you know what each cyber policy does and doesn’t cover before deciding.
An experienced insurance agent can help explain your options, and evaluate your risks to help find the right cyber coverage for your tech business. TechInsurance makes it easy to get advice from experienced agents and insurance quotes from top carriers.
View our small business insurance cost overview or find out how much you can expect to pay for common types of business insurance.