How much does cyber insurance cost in 2024?

The internet has irreversibly changed the way we operate, creating a business landscape that is both full of opportunity and uncertainty. With new cyber threats constantly emerging and cyberattacks targeting businesses of all sizes, cyber insurance is an incredibly important type of coverage for most businesses. But how much does cyber insurance cost?

While there are best practices you can implement to protect your business against cyberattacks, there is no foolproof solution for avoiding them completely.

Besides avoidance, the best way to protect your business from cybercrime is by purchasing cyber liability insurance — this transfers some of the risk associated with cyberattacks to a third party, namely, an insurance company.

In this article, we’ll break down how much cyber liability insurance costs and why it’s an important type of coverage for modern businesses.

How much does cyber insurance cost?

In 2024, the average amount that businesses spent on cyber insurance was between $1,200 and $7,000 annually, with a median cost of around $2,000 per year. This is obviously a very large pricing range, but there are many different risk factors that can affect the cost of your insurance premiums. 

The cost of cyber insurance has also fluctuated significantly in the past few years. For example, in the second quarter of 2022, premiums rose nearly 80%. Prices stabilized a bit in 2023 and 2024, decreasing by around 50% to 60% for some policyholders.

That said, the actual cost of a cyber insurance policy greatly depends on your business’ situation, and premiums can vary quite a bit from company to company.

What affects cyber insurance costs?

The cost of cyber insurance isn’t one-size-fits-all. What you will pay depends on a variety of factors, from the type of business you run to the types of data you handle. Let’s take a look at some of the key things that insurers consider when they’re calculating your business’ cyber insurance cost and premium.

1. Company size

The size of your company can significantly affect the cost of your cyber insurance because the more employees you have, the greater the risk of phishing and social engineering attacks you face. Larger companies are more likely to store sensitive data, such as financial information, making them much bigger targets for cybercriminals.

2. Industry

The type of business you run and the industry that you’re in play a major role in determining your risk level — low, medium, or high — and how much you’ll pay for cyber coverage.

For example, businesses that handle a lot of sensitive data, like those in the tech or finance industries, are considered higher risk than businesses in less data-centric industries, like construction.

3. Amount and sensitivity of data

The level of risk your business faces is another key factor in calculating cyber insurance costs. A small local business with limited customer data, for example, will pay less than a retail store that handles credit card numbers in their store and through their website or e-commerce shop.

At the other end of the spectrum, you have organizations like hospitals and healthcare facilities that store vast amounts of very sensitive personal data (Social Security numbers, dates of birth, etc.). Essentially, the more sensitive data a company deals with, the greater the potential fallout from a data breach, which, in turn, generally results in higher insurance premiums.

4. Annual revenue

The more money your business makes, in the eyes of the insurer, the more attractive it becomes to cybercriminals. On top of that, higher revenue also typically means there is more money at risk in the event of a ransomware attack. Therefore, the more revenue your business generates, the more likely it is that you’ll pay more for your cyber liability insurance.

5. Strength of security measures

Insurers will reward businesses that dedicate significant resources and efforts towards preventing cybercrime with lower premiums. High-risk companies should educate their workers about these risks and get experts to install security protocols, monitor hardware and software security, and put together proper procedures and plans for what needs to be done if a cyberattack does occur. 

6. Policy terms

Your coverage limits and deductible will also influence your premium. The greater your coverage limit is, the more you’re going to pay. Cyber liability coverage limits typically range between $500,000 and $5 million per occurrence.

The deductible is the amount of loss that your business is responsible for in the event of a cyberattack that is covered by your policy. Businesses should consult their brokers to determine which options are best for them. For example, if you’re going to pay a lower deductible, you’ll pay less in the event of a cybercrime. However, you’ll end up paying a greater premium.

7. Claims history

Another factor that plays a major role in determining your insurance cost is your claims history. As with any policy, insurers will look into your past insurance claims when calculating your cyber insurance premiums. If you have a clean claims history, you’ll likely pay less for your cyber coverage. However, you may pay more if you have made claims in the past, especially if those claims were major.

Who needs cyber liability insurance?

In today’s business climate, it’s hard to find a business that doesn’t need cyber liability insurance. If you run a business that stores sensitive client, customer, and partner data, you need it. If your business supports electronic transactions, you definitely need it.

One of the greatest myths related to cybersecurity is that cybercriminals only target large corporations because that’s where they can steal the most money and do the most damage. That really couldn’t be further from the truth.

Small businesses with fewer than 100 employees are 350% more likely to be targeted by social engineering attacks, and more than 40% of small businesses were victims of a cyber attack in 2023. This data shows that your organization’s size does not necessarily exempt you from cybercrime.

In the modern business world, cyber insurance is a good choice for essentially all business owners, but certain industries are at a much higher risk and would definitely benefit more from a cyber liability policy.

• Manufacturing
• Finance
• Insurance
• Energy and utilities
• Healthcare and pharmaceuticals
• Technology

With more businesses asking their employees to work from home and many brick-and-mortar businesses starting to offer online services, social engineering attacks and data breach attempts will almost certainly be on the rise for businesses of all sizes and industries.

In recent years, technological innovations such as AI have paved the way for more sophisticated attacks that can cause more damage and penetrate even the strongest cybersecurity systems. You should never assume your company is completely safe from cybercrime.

So, if you are asking the question, “Does my business need cyber insurance?” the answer is “yes,” in a majority of cases. Almost every business has a realistic need for cyber insurance.

First-party vs. third-party cyber insurance

Another consideration that can affect the cost of your cyber policy is the type of coverage your business chooses. When it comes to cyberattacks, your business is not the only party that can potentially suffer losses. Your customers, shareholders, and clients are also at risk. That’s why there are two types of cyber insurance coverage: first-party and third-party.

First-party cyber liability insurance protects your company from losses related to a cyber incident. It will cover all of the costs related to a cyberattack, including but not limited to the following:

• Forensic analysis for identifying the attack source
• Public relations services
• Notification of clients
• Credit monitoring services
• Loss of income

Any business that deals with electronic data should have first-party coverage to cover the many expenses that can arise from a cybercriminal hacking into its network and compromising the company’s data and the data of its clients, partners, and customers.

Third-party cyber liability insurance is tailored towards providing protection for businesses that offer professional services to other businesses that can be compromised by cyber threats.

This coverage can be compared to a professional liability insurance policy, in the sense that third-party cyber liability insurance can provide protection if another company is suing you for errors that you have made, which have led to losses or damages to that company.

For example, if your law firm’s data security is compromised, and your law firm is accused of failing to prevent the data breach, third-party cyber liability insurance can pay legal fees, government penalties and fines, and settlements and judgments related to such claims.

Common types of cyber liability claims

Generally speaking, cyber insurance claims are most often filed as a result of attacks that usually can fall into one of these three categories: hacking, social engineering, and malware attacks.

Hacking

Hacking is the most common type of cyberattack that leads to insurance claims. If your system or network has been compromised by a hacker, your company could be liable for a variety of expenses related to the attack. As mentioned earlier, legal costs to defend your company against third-party lawsuits, the costs of notifying affected parties, public relations costs, and regulatory fines are all possible and would all be covered by your cyber policy.

Social engineering

Phishing or social engineering attacks rely on asking someone within your company for help in “opening the door” to your data. A very common example of a phishing attack is when a would-be hacker sends an email that claims to be from the CEO of your company to an employee, asking them to follow a link. The employee clicks on the link and downloads something malicious to your network, which grants the hackers access to your data.

The best protection from these types of cyberattacks that rely on employee negligence is providing workplace education regarding these types of threats and preaching vigilance and awareness to your staff.

Malware

Malware attacks are also incredibly common and can come in a huge variety of forms. What’s tricky about stopping malware from invading your system is that every type of malware tries to infiltrate your network in a different way. For example, a common type of malware that is particularly damaging is ransomware, in which attackers hijack your system, asking your company to pay a ransom before releasing or unlocking it. 

Whether you’re dealing with ransomware, spyware, or a DDoS attack, recovering from a malware attack can be costly and time-consuming.

How to keep your cyber insurance cost down

Cyber insurance is one of the most important policies for any business to invest in, but it can certainly be a pretty hefty expense. Let’s take a look at some of the best ways to lower your cyber insurance costs.

Prevention, prevention, prevention

One theme that always resurfaces when discussing cyber insurance costs is the generally accepted best practice of focusing on the proper prevention and management of cyber threats in order to minimize risks and save on coverage. 

Just like with any other type of business insurance, the fewer claims filed against your business that your insurer needs to cover, the better your premiums will be over time. So, the best way to cut back on your cyber insurance costs is to prevent attacks from occurring in the first place. There are many ways to reduce your cybersecurity risks. Here are a few of our top recommendations:

• Practice good cyber hygiene: Using strong, unique passwords, requiring multifactor authentication, avoiding unsecured networks, and regularly monitoring accounts — all help prevent data breaches and protect you against cyber attacks.
• Update your software consistently: Update your cyber security software frequently to ensure your systems are patched and protected. Cybersecurity software is constantly being updated to avoid vulnerabilities, so the latest update is almost always the most secure.
• Use data encryption: Encrypting sensitive data makes it unreadable to unauthorized users, even if they gain access. This reduces the severity of a data breach if one occurs, which, in turn, reduces the scale of any cyber liability claims.
• Restrict access to sensitive data: This ensures that if the device of one member of your staff is compromised, the attacker won’t be able to gain access to all of your company’s sensitive data.

Create an incident response plan

As previously mentioned, having an in-house security team that is dedicated to protecting your business from cyber threats is a smart investment, especially in high-risk industries. Creating a cyber incident response plan is one of the best ways to not only reduce the damages caused by an attack but also show insurance providers that your company is well-equipped and prepared for an incident.

Implement employee cybersecurity training

Managing your cyber liability risks starts with educating your employees. Employees who have a good idea of what cyberattacks look like and what suspicious communications they need to steer clear of will be less likely to do anything that puts your business at risk. Making sure that your staff understands what phishing and social engineering look like gives them the awareness needed to avoid falling for these types of schemes. Additionally, Insurers often reward companies that implement training, as this reduces the likelihood of breaches.

Bundle with other business insurance policies

One of the best ways to reduce your cyber insurance costs is to purchase the policy in a package with other types of coverage, as insurance brokers tend to offer discounted rates for bundled business insurance policies. At Embroker, we offer several different types of industry packages that include cyber liability insurance as well as other industry-specific essential policies.

Don’t snooze on cyber coverage

While cyber insurance is a relatively new type of coverage, it’s definitely something you want to have, especially with the rising number of cyberattacks each year. Cyber liability insurance protects your business from damages caused by attacks and shifts the financial responsibility to your insurance provider, lessening the burden on your business.