Cybersecurity Insurance for Small Businesses: What It Covers & True Cost
Cybersecurity risks have grown dramatically, with small businesses now among the top targets. In 2025, 60% of SMBs reported at least one cyberattack. Cyber insurance is becoming a necessity, not a luxury. This guide explains what it covers, average costs, and how to assess ROI for your company.
1) What Cyber Insurance Covers
- Data Breach Costs: Notification, credit monitoring, legal defense.
- Ransomware Payments: Cover extortion costs (with limits).
- Business Interruption: Compensation for downtime.
- Third-Party Liability: Lawsuits from affected customers.
- Regulatory Fines: Some policies cover GDPR/HIPAA fines.
2) Costs in 2025
| Company Size | Annual Premium | Deductible |
|---|---|---|
| 1–10 employees | $1,200–$2,500 | $2,500 |
| 10–50 employees | $2,500–$6,000 | $5,000 |
| 50–250 employees | $7,000–$15,000 | $10,000 |
3) Real Case Study
A small e-commerce store faced ransomware, paying $40,000 to unlock data. Insurance covered $35,000 + $10,000 in downtime losses. Net protection: $45,000 on $2,500 premium = ROI 18x.
4) Exclusions
- Insider threats (malicious employees often excluded).
- Failure to maintain basic security protocols (e.g., no firewalls, no MFA).
- Acts of war or nation-state cyberattacks.
5) Why SMBs Need Cyber Insurance
SMBs often lack full IT departments but handle sensitive customer data. Cyber insurance ensures survival after an attack by covering otherwise devastating financial losses.
6) Best Practices to Lower Premiums
- Enable MFA across systems.
- Keep software patched and updated.
- Train employees to avoid phishing.
- Back up data and test recovery plans.
Labels: Insurance,Technology