Cybersecurity Insurance is relatively new to the small - medium business world though big brands have been utilising it for years. With cyber threats becoming increasingly difficult to swerve, is it time us smaller-medium businesses (SMB’s) take note? Or is it yet another expense that we can shelf until later?

Let’s explore.

What is cybersecurity insurance?

Cybersecurity insurance, also known as cyber liability insurance or cyber insurance, is a specialised coverage that helps protect businesses from the financial impact of digital threats and data breaches.

It typically covers costs related to data recovery, legal fees, customer notification, and business interruption, which we know can be intense, and even lethal to SMB’s.

Providers include AXA, Hiscox (specialises in SMB’s), Chubb and Direct Line.

Is it required?

No. Not legally in the UK. It’s becoming popular, however, for the following reasons:

Satisfying contractual requirements from clients or partners
Adhering to industry regulations and compliance requirements
Meeting lender or investor requirements
Managing risk of cybersecurity incidents and easing the response should your business fall victim

The Potential Pros of Cybersecurity Insurance

Though built in strategies can reduce the likelihood, unfortunately no business is free from the risk of cyber attacks. Should we be one of the unlucky ones, insurance could assist with:

Financial Protection: Cover costs related to data breaches and cyber attacks
Business Continuity: Help maintain operations during and after an incident
Expert Support: Access to cybersecurity resources, experts and legal counsel
Customer Trust: Demonstrate a commitment to protecting customer and client data
Competitive Advantage: In certain circumstances, such professional steps may give you the edge in gaining certain contracts or partnerships

Cons and Considerations of Cyber Insurance

Despite the seemingly simple extra layer of protection, it’s important to consider the following:

Cost: Premiums can be significant, especially for high-risk industries
Complex Policies: Coverage terms can be difficult to understand
Exclusions: Some types of incidents may not be covered
Requirements: Insurance providers may require specific security measures. This isn’t necessarily a bad thing, but will require some effort and time to implement and maintain.

Does my business need cyber insurance?

In an ideal world, we’d insure every inch of our business, but times are tight, and with so many financial obligations already, businesses need to get firm on prioritising their expenses more than ever.

For your local pub or corner shop, it might not be vital. However, if you think you tick the following boxes, it might be a worthy investment.

You collect customer data (including names, addresses, payment information)
You rely on computer systems for daily operations
You store sensitive information digitally
You conduct business or accept payments online
You want to work with larger companies or government contracts

It is not going to be the answer to all of your cybersecurity issues. If attacked, there will still be an impact, and having insurance won’t prevent it in the first place. But just as we insure our homes, it’s the peace of mind and support to our future selves and business that might make it worth considering.

Think it’s for you? Here’s what to look for.

First things first, look at what you already have. If you have any form of business insurance already it’s worth checking if it may fall under your existing policy. It’s worth clarifying with your provider regardless, as such policies can specifically exclude cyber related incidents.
Compare providers and policies - Spend time speaking to multiple providers and policies to find the right fit for you. If they don’t seem keen to find an option that’s right for you, move on to the next. Moving forward, make sure review your policy annually and see if there might be a better deal elsewhere
Read the fine print regarding coverage limits and exclusions - yawn, I know, but there’s no point paying for something that’s not going to cover you when the ‘mess’ hits the fan. In a comprehensive policy, look out for the following elements:
- Data breach response and notification costs
- Business interruption coverage
- Cyber extortion protection
- Recovery and restoration expenses
- Third-party liability coverage
Ensure the policy aligns with your specific business needs - certain industries may have different requirements so speak to those in your field who may have such insurance and find what works for you.
Consider working with an insurance broker specialising in cyber coverage - find someone far more expert than I to advise you on what you need. Make sure they are unaffiliated with providers and go off solid recommendations where possible.

While insurance represents an additional business expense, the potential costs of an incident without coverage can be devastating for SMBs. As threats continue to evolve and multiply, having appropriate coverage is becoming less of an option and more of a necessity for business resilience and sustainability.

Don’t forget that insurance is just one small piece of the puzzle. Robust security measures and employee training can work just as hard to protect your business. Get started by browsing the blog or signing up to our free program for SMB’s below.

The Key, a free 5 day course in cybersecurity for small- medium businesses

The new program is designed for those who own and run small businesses, wanting to strengthen their defences but are unsure where to start.

In under 3 hours over the space of one week, the program will guide you to build in solutions to build resilience, professionalise your brand and protect your business and it’s clients.

No matter your tech level, these are the essential, bare minimum kind of defences you need to pay attention to for a successful year ahead.

Download it here!

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