How much does cyber insurance cost for a small business?

Most small businesses pay between $1,000 and $7,500 annually for cyber insurance, with the average around $1,740 per year for $1 million in coverage. About 38% of small businesses pay less than $100 monthly, especially those with fewer than 10 employees and strong security practices. Factors affecting cost include your industry, revenue, data sensitivity, and existing cybersecurity measures.

What's the difference between standalone cyber insurance and adding it to my BOP?

Cyber coverage bundled with a Business Owner's Policy typically costs less but only covers third-party expenses like regulatory fines and customer notification. Standalone policies offer more comprehensive protection, including first-party losses like your own data recovery costs, business interruption, and ransomware payments. Businesses handling sensitive data should usually opt for standalone coverage despite the higher cost.

Will cyber insurance cover ransomware attacks?

Yes, about 63% of cyber insurance policies cover ransomware attacks, including negotiation costs, ransom payments (where legal), and data recovery expenses. However, insurers increasingly require strong security controls like multi-factor authentication and regular offline backups before they'll cover ransomware. Some policies may exclude coverage if you failed to implement basic security measures that could have prevented the attack.

What security measures do I need to qualify for cyber insurance?

Most insurers now require multi-factor authentication, regular data backups stored offline, endpoint detection and response software, and employee cybersecurity training. Some also require encryption for sensitive data, documented incident response plans, and regular security updates. Meeting these requirements not only helps you qualify for coverage but can reduce your premiums by 30-50%.

Does cyber insurance cover data breaches caused by employee mistakes?

Generally yes, most policies cover breaches resulting from employee negligence, like falling for phishing scams or accidentally exposing customer data. However, intentional malicious acts by employees are typically excluded. The distinction between negligence and intentional misconduct can significantly impact claims outcomes, so it's important to understand your policy's specific language around insider threats.

Do I need cyber insurance if I don't store customer data online?

Even businesses with minimal online presence face cyber risks. If you accept credit card payments, use email, store any customer information digitally, or rely on computers for daily operations, you're vulnerable. A ransomware attack can shut down your business even if you don't have an e-commerce site. With policies available for under $100 monthly and breach costs averaging $120,000, insurance is worth considering regardless of your digital footprint.

Cyber Insurance for Small Business: Affordable Coverage Guide

Here's something that might surprise you: if you run a small business with fewer than 50 employees, there's a 44% chance you don't have cyber insurance. Yet nearly half of all small businesses experienced a cyber attack in 2023. That math doesn't add up in your favor.

The good news? Cyber insurance for small businesses has never been more affordable. After skyrocketing in 2022, premiums dropped by 50-60% through 2024 and into 2025. What used to cost thousands now averages around $145 per month, and many businesses qualify for coverage under $100 monthly. If you've been putting off cyber insurance because of cost, it's time to take another look.

What Cyber Insurance Actually Covers

Think of cyber insurance as your financial safety net when digital disasters strike. Most policies cover data recovery (81% of policies), data breaches (80%), and ransomware attacks (63%). But coverage extends beyond just the hack itself.

When your customer data gets compromised, you're legally required to notify affected individuals. That means printing and mailing thousands of letters, offering credit monitoring services, and probably hiring a PR firm to manage the fallout. A typical breach notification alone can cost $50,000 to $100,000. Your cyber policy covers these expenses.

Business interruption coverage (included in 62% of policies) helps replace lost revenue when you can't operate due to a cyber attack. Legal costs (covered by 59% of policies) protect you when customers sue after their information is stolen. And forensic IT support helps you figure out what happened and how to prevent it from happening again.

How Much Does Cyber Insurance Cost?

Let's talk real numbers. In 2025, small businesses typically pay between $1,000 and $7,500 annually for cyber insurance, with the sweet spot around $1,740 per year for $1 million in coverage. That breaks down to about $145 per month.

But here's where it gets interesting: 38% of small businesses pay less than $100 monthly. If you have fewer than 10 employees, handle minimal sensitive data, and have basic security measures in place (think: antivirus software, regular backups, multi-factor authentication), you could qualify for policies as low as $75 per month.

Compare that to the average breach cost of $120,000 to $1.24 million, and suddenly $100 a month looks like a bargain. One ransomware attack could bankrupt your business. Insurance premiums? Those are just the cost of staying in business.

Bundling with Your Business Owner's Policy

Many insurance companies now offer cyber coverage as an add-on to your Business Owner's Policy, and it's often cheaper than buying standalone coverage. Major carriers like Progressive, Liberty Mutual, and The Hartford all bundle cyber protection with their BOPs.

But there's a catch. Bundled cyber coverage typically only covers third-party costs like regulatory fines, customer notification, and credit monitoring. It usually excludes first-party losses—meaning you won't get reimbursed for your own data recovery costs, business interruption, or ransomware payments. For many small businesses with lower cyber risk, that's fine. For others, standalone coverage provides better financial security.

Ask your insurance agent to compare both options. If you process credit cards, store customer health information, or handle any kind of sensitive personal data, standalone coverage is probably worth the extra cost.

What Cyber Insurance Doesn't Cover

Understanding what's not covered matters just as much as knowing what is. Acts of war and nation-state sponsored attacks are typically excluded. That sounds abstract until you realize that many major cyber attacks are attributed to foreign governments or their proxies.

Known vulnerabilities before your policy starts won't be covered either. If you're switching insurers or buying cyber insurance for the first time, any existing security holes or ongoing incidents are your problem, not theirs. This is why it's crucial to get covered before something happens.

Most policies also exclude intellectual property theft, certain regulatory fines deemed punitive rather than compensatory, and business interruptions caused by non-malicious system failures (like when your server crashes because of a bad software update rather than an attack). Future lost profits from customers who leave after a breach? Usually not covered.

The takeaway: read your policy carefully and ask specific questions about scenarios relevant to your business. The time to understand your coverage isn't after you've been hacked.

How to Get the Best Rate

Insurers reward businesses that take cybersecurity seriously. Want lower premiums? Start with the basics: implement multi-factor authentication on all accounts, maintain regular data backups stored offline, use endpoint detection and response software, and train your employees to recognize phishing attempts.

Many insurers now require these security controls before they'll even issue a policy. But meeting these requirements can slash your premiums by 30-50%. A $2,000 annual policy might drop to $1,000 if you can demonstrate strong security practices.

Also, shop around. Cyber insurance pricing varies wildly between carriers. Get quotes from at least three insurers, and don't just compare price—compare coverage limits, deductibles, and exclusions. The cheapest policy isn't always the best value.

Getting Started with Cyber Insurance

First, assess your actual risk. Do you store customer credit card information? Employee social security numbers? Health records? The more sensitive data you handle, the more coverage you need. A retail shop with minimal online presence might need only basic coverage, while a healthcare practice or accounting firm needs comprehensive protection.

Next, document your current security measures. Insurers will ask detailed questions about your cybersecurity practices during the application process. Having this information ready speeds up the process and may qualify you for better rates.

Finally, work with an agent who specializes in cyber insurance for small businesses. The landscape is complex and changing rapidly. A knowledgeable agent can help you navigate requirements, find the best coverage for your specific industry, and avoid overpaying.

Cyber threats aren't going away—in fact, 61% of insurance professionals say AI-powered attacks are their top concern for 2025. But with premiums down and coverage improving, there's no better time to protect your business. The question isn't whether you can afford cyber insurance. It's whether you can afford to go without it.

Cyber Insurance for Small Business

Key Takeaways