Because cyber criminals know the internet is the glue holding modern companies together, businesses make prime hacking targets.Regardless of size or apparent level of cyber security, no business is completely safe from a cyber attack. Businesses must prepare themselves with the right level of insurance.
The right insurance can save companies millions of dollars, reduce lost time, and even pay ransoms or prevent them from needing to make such payment. Companies that have It can get back to business faster than those that don’t. Learn about the cyber insurance cost for businesses and the alternative cost of not investing in the right coverage plan.
Cyber Insurance Costs for Businesses
When it comes to any insurance coverage, cyber-related or not, one size rarely fits all. The price of cyber insurance can differ drastically depending on several factors, including:
Some industries are at a higher risk of cyber attacks. Whether it’s their dependency on online systems, the data they tend to store, or their systems’ vulnerability, businesses in the following industries continue to be most vulnerable to cyber attacks:
Insurance premiums tend to be more expensive in these industries because their level of risk is higher. On the other hand, businesses in lower risk sectors can expect to pay less to protect themselves.
Revenues are another important factor used as the ratings base for almost all cyber policies. Generally, larger companies will pay more for cyber insurance than will smaller ones.
While hackers can wreak havoc on a business of any size, their attacks on companies with large revenues will likely cause more overall damage. The economic impact of a multibillion-dollar corporation’s online systems being frozen for two weeks, for example, will be more significant than the impact of a smaller business’s systems being frozen. Such attacks will also likely involve larger ransoms.
However, cyber attacks against small businesses can do a disproportionately large amount of harm to those businesses. These often have less bandwidth and resources to respond to a company shutdown. Small businesses without adequate cyber insurance coverage run a considerably larger risk of going out of business should a cyber attack occur.
If a business stores an abundance of valuable data, they make themselves a target to hackers. When they gain control of valuable files, hackers can charge large ransoms, knowing the business either has to pay or risk leaking data that could land them in legal hot water or put them at a competitive disadvantage. Such data includes:
- Personal Identifiable Information
- Personal Health Information
- Confidential Corporate Information
- Credit Card or Bank Account Information
- User or Customer Information
Because companies storing lots of data face a host of potential costs associated with a cyber attack, they typically pay higher premiums than companies storing little or no data.
Limits and Coverage Terms
Depending on the level of protection a business wants, their particular exposures, and the controls they have in place, they will pay different amounts for cyber insurance.
For example, a company with poor controls in a lower hazard industry may not be able to get cyber insurance, or will pay more for reduced coverage. A similar business with good controls, however, may have many options to review when finding the best policy and terms for their business.
Like a driver who has a track record for crashing, businesses with a history of filing claims for cyber attacks are a higher risk for insurance companies. Assuming a company with a history of cyber attacks can get insured in the first place, it will often pay high premiums for that protection.
The Cost of Not Having Cyber Insurance
Depending on the business and the coverage it needs, cyber insurance can be a significant expense. Therefore, the question remains: Is the cyber insurance cost worth its price tag, or are companies better off roughing a cyber attack alone?
In 2017, for instance, hackers attacked the credit reporting agency Equifax and exposed almost 150 million Americans’ data. Ultimately, the scandal cost Equifax $600 million to resolve and resulted in a $4 billion drop in the company’s stock market value.
The cost of a cyber attack and not having cyber insurance extends past the initial cost of paying the ransom or rebuilding online systems. In fact, the majority of the cost can come from sources many business owners never consider, including:
- Decrease in market value
- Loss of current and future customers
- Lost revenue while online systems are down
- Stolen proprietary data
- Damage to IT infrastructure
- Attorney fees
Cyber attacks can devastate the financial standing of businesses that don’t carry adequate cyber insurance coverage. These events can quickly turn unmanageable after accounting for the layers of hidden costs and fees associated with them.
However, cyber insurance can help mitigate the risk of cyber attacks and get companies back in business faster than they’d be able to without it. Companies can choose from various coverage levels and manage their premiums by deciding how much risk they want to take.
To guide businesses in purchasing the right level of coverage while comparing the costs of different plans, click here for a no-obligation cyber liability insurance quote for your client.
Or speak with a ProWriters cyber insurance expert to learn how we can help you better serve your business clients.