Cyber Insurance Companies: Top 7 Best in 2023

Cybersecurity risks are a burden for small business owners who conduct business online and take payments digitally. In 2022, small businesses were the target of 43% of data breaches. Customers’ personally identifiable information (PII) was the most often lost record in 2021, costing firms an average of $180 per record, according to a survey by IBM and the Ponemon Institute. Your company can avoid the financial fallout of a data breach with the help of cyber insurance. In this article, we will discuss the best cyber insurance companies and their policies

First, we’ll get a quick overview of cyber insurance and how it works, and then we’ll go on to check out several cyber insurance companies.

What Is Cyber Insurance?

Cyber insurance is a particular type of insurance that safeguards policyholders financially from the dangers posed by the internet. Cybercrimes, such as data breaches, ransomware attacks, and hacking incidents, are becoming increasingly common in today’s digital age, threatening organizations and individuals alike. Cyber insurance is meant to lessen the monetary blow of cyber attacks.

These plans often protect against a wide variety of hazards. Coverage in the event of a data breach is essential, as it assists businesses in meeting the expenses of conducting a breach investigation, informing affected parties, and offering credit monitoring services to individuals affected. Coverage for business interruption, which pays out to organizations for lost revenue and supplementary costs incurred as a result of a cyber attack, is another important feature.

Protection against cyber extortion, in which hackers hold encrypted data hostage and demand a ransom in exchange for decrypting it, is another feature of cyber insurance. Cyber liability insurance can also protect businesses against the financial fallout of litigation and regulatory fines stemming from cyber attacks. In addition, cyber insurance is becoming increasingly important as cyber risks develop, as it protects against financial loss in the event of a cyberattack and aids in the recovery process.

How Does Cyber Insurance Work?

Obtaining insurance coverage begins with filling out an application and detailing your requirements, whether you’re an individual or a company. A risk assessment is the procedure an insurer uses to figure out how much of a hit they would take if they were to insure your firm. According to these details, the insurance company will determine your rate.

If you’ve been the victim of a cyberattack, file a claim. Insurers may have you submit a claim using an online portal or via phone. After reporting a problem, the insurer will look into it and advise you on what to do next. Forensic investigators can help insurance companies assess the full extent of an assault, and the companies will then tell anyone who has been compromised. Coverage for paying a ransom is available in some plans.

Insurers will typically pay claims up to the policy’s maximum, less any applicable deductible, once the damages have been calculated. Alternatively, your insurance may offer to pay for the costs associated with repairing the damage a cyberattack has caused (such as rebuilding a website or other crucial digital infrastructure).

Keep in mind that insurance won’t assist you against these assaults unless it additionally provides extra cybersecurity services. Keeping confidential company files safe requires the use of a reliable cloud storage service. Secure your data by reading our breakdown of the top cloud storage services for enterprises of any size.

Two-factor authentication (2FA) is another important cybersecurity best practice that should be implemented company-wide. In the event that your passwords are compromised, 2FA will prevent hackers from accessing your account. The second email or text message will be used to confirm your identity as the account holder.

What Are the Two Types of Cyber Insurance?

The two main types of cyber insurance are first-party coverage and third-party coverage.

#1. First-Party Coverage

First-party coverage protects the policyholder’s own assets and covers the immediate costs incurred as a result of a cyber incident. This type of coverage includes expenses related to data breaches, such as forensic investigations, notification of affected individuals, credit monitoring services, and costs associated with restoring compromised data or systems. First-party coverage also includes business interruption insurance, compensating the insured for lost income and additional expenses resulting from a cyberattack or data breach that disrupts business operations.

#2. Third-Party Coverage

On the other hand, third-party coverage shields the policyholder from lawsuits brought by external parties who have suffered harm as a result of a cyber incident involving the insured company, such as customers, clients, or business partners. This type of coverage includes expenses related to legal defense, settlements, and judgements in the event of lawsuits resulting from data breaches or other cyber-related liabilities. It also covers costs associated with regulatory fines and penalties that may be imposed due to non-compliance with data protection laws.

Businesses often need a combination of both first-party and third-party cyber insurance to comprehensively protect themselves against the complex and multifaceted risks associated with cyber threats.

What Does Cyber Insurance Cover?

Cyber insurance coverage, depending on the insurer, may pay for expenses like data recovery, forensic investigation, cyber extortion, and legal fees in the event of a data breach or cyberattack.

Most service providers also offer coverage for cyberattack-related downtime. Included in this total are both the revenue lost should you be forced to close your firm and the costs associated with reopening. Cyber insurance is able to cover ransomware attacks, dishonest employees, liability claims, and brand harm.

What Cyber Insurance Doesn’t Cover

While cyber insurance is useful for filling up some liability gaps, there are circumstances in which a data breach or cyber attack will not be covered. A few examples of them are:

Injury or property damage: Cyber insurance does not cover claims involving bodily harm or property damage. Businesses require general liability insurance to safeguard themselves against such lawsuits.
Property damage: Commercial property insurance is designed to compensate business owners for property loss. Therefore, cyber liability insurance might not cover the loss of an employee’s laptop containing personally identifiable information.
Stance of insecurity: Insurance companies are demanding increased security measures from their clients as a prerequisite to providing coverage since the number of cyberattacks grows each year. Companies may find that their provider may not cover damages resulting from gaps in their security posture if they do not take at least some basic steps to safeguard themselves through best-practice security procedures.
Intentional or illegal behavior: Cyber insurance does not cover deliberate, dishonest, or illegal behavior on the part of a business.
Utility outage: If a utility network goes down, cyber insurance probably won’t reimburse you for any damages.

What Is the Average Cost of Cyber Security Insurance?

Cyber insurance costs vary widely depending on a number of variables, such as the company’s size, the sector it works in, and the degree of security it has implemented or is mandated to do. Cyber liability insurance costs are typically between $600 and $2,500 annually.

For instance, the cost of cyber insurance will be lower for a small business with a limited online presence than for a huge organization with a sizable one. A company’s insurance premium will increase in proportion to the sensitivity of the data it processes. The heightened possibility of a cyberattack is reflected in the higher premiums that businesses in high-risk industries like finance and healthcare often pay.

Also, the cost of cyber liability insurance also depends on how much coverage is needed. A company can purchase either first-party or third-party insurance or both.

First-party coverage includes things like data recovery and business interruption costs, whereas third-party coverage covers legal responsibility resulting from data breaches that harm customers. Businesses that face both first-party and third-party risks should consider purchasing both types of coverage, even though doing so will increase the costs compared to purchasing just one.

In addition, a number of other factors may also have an impact on the cost of cyber liability insurance. The company’s security procedures, claims history, and deductibles all play a role. Firewalls and intrusion detection systems are only two examples of strong cybersecurity measures that can help a business lower its insurance premiums. Having no claims or few claims on record might also result in premium discounts.

What to Look for When Buying Cyber Insurance

Any business serious about improving its cybersecurity measures and limiting its exposure to risk should purchase cyber insurance. Reviewing internal security protocols, external benchmarks, and various factors pertaining to the policy’s structure and coverage are all essential before making a final decision. Here are some of the top factors to consider when buying cyber insurance:

#1. Cyber Security Strategy

Reviewing one’s own cybersecurity policies and strategy is a must before investing in cyber insurance coverage. This will aid in communicating data security requirements and potential cyber threats to your team. We’ve made a handy cyber insurance checklist to guide your review; be sure to pay attention to the following points:

What kinds of data does your company collect or handle?
What are your current data storage and backup practices? Are they secure?
Does your business rely heavily on confidentiality?
Do you have a website or app that stores sensitive data?
Are there third-party vendors that access your IT infrastructure?
Do you allow employees to bring their own devices?
What is your cyber insurance budget?

In addition to these measures, it may be helpful to examine your current insurance policy to see if cyber insurance is included. Your policy’s liability limits should reflect the fact that there may already be supplementary coverage in place for specific instances that can augment a dedicated cyber insurance policy. You should examine your insurance policy every year and make any necessary adjustments, as is the case with any other type of insurance.

#2. Cyber Insurance Policies

Since there is no universal standard, cyber insurance policies can look and read very differently depending on the provider. Therefore, it is crucial to read the fine print of any policy and comprehend the precise forms of protection and assistance given. You can tailor the liability limits for specific regions to strike a good balance between cost and coverage for your specific circumstances.

Also, it’s important to get answers to your queries and double-check the policy’s specifics before committing to coverage. It will be challenging to modify your coverage in the event of a data breach, and you will be subject to the limitations of your current policy.

#3. Cyber Insurance Coverage

Looking beyond the policy’s overview of coverage and into the details is essential for comprehending a cyber insurance policy. First-party coverage and third-party liability are the two main categories of cyber insurance. Let’s take a look at the specifics of cyber insurance coverage to get a sense of what each policy protects against.

Violence and threats against businesses.

First-party coverage refers to expenses incurred directly as a result of a data breach or cybercrime. Cyber extortion, computer attacks, fraudulently redirected payments, computer fraud, and telecommunications fraud all contribute to this cost.

Crisis Management.

Primary insurance typically covers the costs of detecting, mitigating, and recovering from a cyberattack or data breach. Response fees, forensic accounting, and penalties from regulators are all examples of what this category might cost.

Third-Party Lawsuits

To safeguard against any legal obligations in the event of a data breach, third-party coverage is obtained. In the event of a data breach, companies are often required by law to notify their customers. Liability claims concerning the safety of computer networks or digital media could emerge from this.

Rebuilding Your Public Reputation and Sense of Self

Public relations and identity restoration insurance are frequently utilized in the aftermath of a data breach involving personally identifiable consumer information. First-party coverage can apply in the event of a data breach involving sensitive information such as a person’s name, Social Security number, or bank account details.

It is important to check for exclusions and ensure that they will not expose you to unnecessary liability when assessing areas of coverage. It’s also important to get the right amount of cyber insurance for your company, so don’t skimp or go overboard. The best cyber insurance policy will cover both your own losses and those of others, as both are necessary.

When a company suffers a cyberattack or data breach, having cyber insurance can make a world of difference. Having someone to lean on during a crisis might help you manage the various tasks necessary to make a full recovery. You should always look for a cyber insurance policy that fits your cybersecurity requirements and provides appropriate coverage to help you deal with the risks you’ve identified. Collaboration with a reputable cyber insurance provider can ensure the correct coverage and readiness to handle a cyber event.

What Is the Difference Between Cyber Security and Cyber Insurance?

Cybersecurity and cyber insurance are related concepts but serve different purposes.

Cybersecurity

It refers to the practice of protecting computer systems, networks, and data from theft, damage, or unauthorized access. The concept of cybersecurity comprises a diverse array of technologies, processes, and practices that have been specifically developed to ensure the protection and security of digital information and systems. It measures include firewalls, encryption, multi-factor authentication, regular software updates, and employee training to prevent cyber threats like malware, phishing attacks, and data breaches. In the digital world, it takes the initiative to prevent and lessen potential threats.

Cyber Insurance

Cyber insurance, on the other hand, is a type of insurance coverage designed to help businesses mitigate financial losses resulting from cyber incidents. These incidents can include data breaches, ransomware attacks, business interruptions due to cyber events, legal fees, and costs associated with notifying affected customers. Cyber insurance provides financial protection by covering the costs related to investigating the breach, providing legal support, notifying affected parties, and often helping with reputation management. It does not prevent cyber threats but provides a safety net in case preventive measures fail and a security breach occurs.

In summary, cybersecurity is about implementing protective measures to prevent cyber threats, while cyber insurance is a risk management strategy that provides financial coverage in the event of a cyber incident despite preventive efforts. Organizations often use a combination of both cybersecurity practices and cyber insurance to comprehensively manage their cyber risk.

Why Is It Difficult to Get Cyber Insurance?

Obtaining cyber insurance can be challenging for several reasons:

#1. Complex Risk Assessment

Assessing an organization’s cyber risk is complex and involves evaluating various factors such as the type of business, the volume of sensitive data, existing cybersecurity measures, and potential vulnerabilities. Insurers often struggle to accurately assess these risks.

#2. Rapidly Evolving Threat Landscape

The continually changing tactics of cybercriminals and the emergence of new threats, such as sophisticated phishing schemes or ransomware variants, make it difficult for insurers to predict and quantify potential losses accurately.

#3. Lack of Standardization

Unlike some traditional insurance types, there isn’t a standardized framework for cyber insurance. Policies and coverage can vary significantly between insurers, making it challenging for businesses to compare and choose the right coverage for their specific needs.

#4. High Costs of Cyber Incidents

Cyber incidents can result in significant financial losses. Insurers are cautious about providing coverage, especially when the potential costs of a large-scale cyberattack can be substantial.

#5. Inadequate Cybersecurity Measures

Insurers are more likely to offer coverage to organizations that have robust cybersecurity measures in place. If a business lacks adequate security protocols, it might find it challenging to secure cyber insurance.

Best Cyber Insurance Company

With the advent of fast digital transformation and the subsequent development of ever-evolving cyber dangers, cyber insurance has become a popular risk management tool among companies across the country. The leading cyber insurance companies in the United States play an increasingly important role as cyberattacks increase in frequency and sophistication. Here are some of the best cyber insurance companies you might want to consider as a business owner:

#1. Hiscox

Cyber insurance coverage from Hiscox includes protection against cyber extortion, ransomware, and the cost of recovering lost data. Cyber insurance costs for new businesses range widely according to variables including industry, company size, and desired level of protection. Hiscox, on the other hand, is famous for providing affordable cyber insurance products. Hiscox’s general liability insurance coverage is apparently lower than that of several competitors, however, the company’s cyber insurance premiums are not displayed on the internet.

The standard minimum general liability coverage required by this company is $1,000,000 per occurrence. The maximum $2 million in cyber insurance that Hiscox offers will be sufficient to protect the majority of small businesses. However, this could be a drawback if your company requires rapid expansion. In that situation, a cyber insurance company that specializes in serving medium-sized enterprises would be a better fit than one that offers coverage of only $2 million.

#2. Chubb

It has been said that Chubb is one of the most reliable and all-encompassing insurers on the market, but also one of the most pricey. The company does not require a minimum payment and offers various rates based on risk.

Chubb provides insurance for cryptocurrency and cybercrime losses, business disruption costs, and extortion fees. The organization is cognizant of the fact that with emerging technologies come complex compliance and security concerns. Chubb is able to offer tailor-made coverage that may grow with your company to alleviate these worries.

However, there is a lot of criticism of Chubb on the web. Based on 324 reviews, the company has earned a Trustpilot rating of 1.2 stars out of 5. The Better Business Bureau gave it a grade of D+, and its 11 customer evaluations averaged only 1.36 stars out of 5. However, there aren’t many reviews on either site, so don’t assume that low ratings there indicate poor service.

#3. Travelers

The Travellers website does not feature any exclusive content. However, the company’s services are affordable because they are geared towards smaller businesses. What’s more, should a data breach occur, the insurance will provide for your every need, including:

Crisis management expenses
Business interruption
Forensic investigations
Litigation expenses
Cyber extortion
Replacement of compromised software

However, many cyber insurance policies exclude crisis management, forensic investigations, and legal fees. You should consider whether your company is vulnerable to cyberattacks.

Few reviews of Travellers can be found online, and those that do tend to be negative. Based on 135 evaluations submitted to the BBB, Travellers received an overall score of 1.03 out of 5. A lot of people are upset about how difficult the claims process and customer service have been. In contrast to cyber insurance, most reviews focus on auto insurance and related items.

When compared to many other providers, Travellers’ cyber liability coverage is more extensive. However, the company might do better in areas such as customer service, online quotations, and the processing of claims.

#4. The Hartford

The Hartford has been around for almost 211 years, and in that time it has helped millions of individuals and businesses realize their dreams, grasp opportunities, and overcome adversity. As part of its efforts to safeguard businesses from potential cyber threats, the company has pledged to provide policies with comprehensive insurance.

The business provides not one, but two types of cyber insurance protection: cyber liability insurance and data breach insurance. Whereas data breach insurance aids smaller firms in the event of a breach, liability insurance is more commonly used by larger businesses and provides more protection in the event of a cyberattack.

#5. AXIS Capital Holdings

AXIS is a leading international specialty insurer and reinsurer, providing coverage in more than 100 countries. When it comes to cyber insurance, the company provides brokers and clients with in-depth knowledge of data security management, as well as advice on how to get ready for and respond to a cyber catastrophe.

Numerous sectors, such as the arts, healthcare, manufacturing, and transportation, can take advantage of the company’s many cyber insurance options. To assist its customers in assessing the nature of cyber threats and developing appropriate responses, AXIS draws on both its own resources and those of other market leaders.

#6. AXA XL

Before cyberattacks even happen, AXA XL hopes to lend a hand. AXA XL policyholders have access to incident response services as well as proactive cybersecurity risk mitigation services and individualized risk consulting. The firm offers a global perspective on risk management for its clients, based on a thorough familiarity with their core values and objectives as a business.

The services also include specific coverage options, cyber risk management that proactively seeks out and neutralizes risks, and a 24/7 claims hotline.

#7. Munich Re

In order to provide businesses, individuals, and primary insurers with a wide variety of cyber insurance solutions, Munich Re has formed specialized cyber teams with extensive knowledge and established solid connections. The company’s goal is to create policies that adhere to cybersecurity standards while still having reasonable premium and retention levels and being written in plain English.

The company’s plan hinges on its ability to identify cyber threats, quantify their severity, and turn them into insurable risks. Insurance and reinsurance professionals, as well as other outside parties, work closely together to accomplish this goal of providing vital protection for businesses.

Does Cyber Insurance Pay Out?

Yes, depending on the policy’s terms and circumstances, cyber insurance policies are intended to pay out in the case of a covered cyber incident such as a data breach, cyber attack, or other cybersecurity incident. The insurance policy’s specifics will govern the payment procedure and the amount to be paid out.

It’s worth noting, though, that the policy’s terms and conditions may impose restrictions on the payout. When an insurance company receives a claim, it will frequently investigate it thoroughly to make sure it is legitimate and covered by the policy. The insurance company will help the impacted business recover financially from a cyber attack if the attack is insured and fits the policy’s terms.

Understanding what is and is not covered by a cyber insurance policy requires a thorough examination of the policy’s terms, conditions, and coverage restrictions. To make sure you’re covered in the case of a cyber disaster, it’s important to equip yourself with the contents of your insurance.

Is Cyber Insurance a Good Idea?: Bottom Line

Yes, cyber insurance can be a valuable asset in today’s digital age. With the increasing frequency and sophistication of cyber attacks, businesses and individuals face significant risks associated with data breaches, ransomware attacks, and other cyber threats. Cyber insurance provides financial protection by covering the costs related to data breaches, including legal fees, notification expenses, and potential regulatory fines. For businesses, it can also include coverage for business interruption losses and extortion payments.

Having cyber insurance can safeguard businesses from the potentially devastating financial impact of a cyber incident, offering a safety net to aid in recovery efforts. However, it’s crucial to carefully assess policy options, understand coverage limits, and invest in robust cybersecurity measures alongside insurance to create a comprehensive defense against cyber threats.

Frequently Asked Questions

Is cyber insurance worth it for individuals?

Yes, in the event of a cyber attack, such as extortion, cyberbullying, a data breach, or online fraud, personal cyber insurance can help you get back on your feet. Your home insurance coverage will compensate you for your lost laptop. Your homeowner’s policy might potentially cover data recovery, depending on your insurer.

What is the most common cyber insurance claim?

Stolen funds: These days, nearly every business moves its money around electronically. Unfortunately, that makes it much easier for cybercriminals to steal.