Could Your Business Survive a Ransomware Attack? 75% of SMBs Wouldn't—Are You Prepared?
In today's digital-first world, cybersecurity threats are not just a possibility—they’re a certainty. Whether you run a small business or a large enterprise, the risks of ransomware attacks, phishing schemes, and insider threats are ever-growing.
According to Cyber Defense Magazine, ransomware attacks surged by 93% in 2023 alone, causing businesses to lose an average of $4.45 million per breach. And here’s the kicker—75% of small and mid-sized businesses (SMBs) that suffer a ransomware attack go out of business within six months due to crippling financial losses and reputational damage.
A comprehensive cybersecurity insurance policy can help protect your company by covering breach-related expenses such as forensic investigations, legal fees, customer notification, regulatory fines, and business interruption losses. But choosing the right policy requires more than just signing up—it requires understanding your risk landscape, balancing cybersecurity investments, and selecting the right coverage for your business
1. Understand Your Business’s Cybersecurity Risks
Before choosing a cybersecurity insurance policy, you need to assess your unique vulnerabilities and threats.
Conduct a Risk Assessment:
Identify the biggest threats to your business, such as ransomware, phishing, insider threats, or supply chain attacks.
Evaluate the financial, operational, and reputational impact of a cyber incident.
Consider Industry-Specific Risks:
Healthcare: Compliance risks under HIPAA and a high likelihood of data breaches targeting medical records.
Retail & eCommerce: Point-of-sale (POS) and payment data theft are major risks.
Manufacturing & Logistics: Operational shutdowns from ransomware attacks can cause severe delays and revenue losses.
Financial Services: Cybercriminals often target banking and investment firms due to the high-value nature of financial data.
Understanding these risks helps right-size your cyber insurance policy so you’re not over- or underinsured.
2. Balance Technology Security with Cybersecurity Insurance
Cyber insurance isn’t a replacement for security—it’s a safety net when all else fails. The better your security measures, the lower your insurance premiums.
Strengthen Security to Reduce Insurance Costs:
Implement multi-factor authentication (MFA) across all systems.
Keep software and firmware patched and updated to reduce vulnerabilities.
Train employees on phishing awareness to lower the likelihood of social engineering attacks.
Use Cyber Insurance for Unavoidable Risks:
Even with the best security, human error, insider threats, and large-scale attacks can still occur.
Cyber insurance covers financial damages from attacks you can’t always prevent (e.g., ransomware, zero-day exploits, or employee negligence).
A layered approach combining strong security with comprehensive cyber insurance ensures the best protection against modern cyber threats.
3. Know the Types of Cyber Insurance Coverage
Not all policies cover the same risks. Here are the main coverage options:
First-Party Coverage: Protects your business from direct financial losses, including:
Data recovery & forensics after a breach.
Ransomware extortion payments (if necessary).
Business interruption costs (loss of revenue due to cyber incidents).
Third-Party Coverage: Protects against liabilities from external parties, including:
Lawsuits from affected customers or partners due to data breaches.
Legal fees and compliance fines (e.g., HIPAA, GDPR violations).
Regulatory & Additional Coverage Options:
Fines from data privacy regulators.
PR & crisis management costs (to repair reputational damage).
4. Review Your Existing Insurance Policies
Many businesses assume general liability insurance includes cyber coverage—it doesn’t.
Review Your Existing Policies:
Most general liability or business owner’s policies (BOPs) exclude cyber incidents.
If you have a professional liability policy, it may not cover financial losses related to cyberattacks.
Assess Coverage Gaps:
Does your current policy cover third-party lawsuits?
Are regulatory fines and ransom payments covered?
Does the policy include coverage for business interruption?
Identifying gaps in your current coverage prevents costly surprises when an attack happens.
5. Evaluate Policy Features and Limitations
Cyber insurance policies vary, and some may leave you vulnerable. Watch for:
Policy Limits: Ensure your coverage amount matches potential risks. Considering the average data breach costs $4.45 million, underinsuring can be dangerous.
Exclusions: Some policies don’t cover social engineering fraud, insider threats, or certain types of ransomware attacks.
Incident Response Support: Choose policies that include expert-led recovery assistance to minimize damage and speed up recovery.
6. Work with an Expert (Including Your IT Partner) to Complete the Paperwork
Cyber insurance applications can be complex, often requiring detailed security documentation.
Collaborate with Your IT Partner or MSP:
Document existing firewalls, endpoint protection, and backup procedures.
Provide technical details about network monitoring and threat detection.
Ensure compliance with industry security standards (NIST, ISO 27001, CIS Controls).
Accurate Paperwork = Faster Approvals & Fewer Claim Denials:
Incomplete or inaccurate applications can lead to claim rejections later.
Regular security audits help ensure compliance with insurer requirements.
7. Choose a Reputable Cyber Insurance Provider
Not all insurers understand cyber risks.
Look for Providers with Proven Cyber Expertise:
Review Claim Processing Times & Support:
Some insurers are slow to process claims, which can delay your business recovery.
8. Tailor Coverage to Your Business Needs
Cyber risks differ by industry, business size, and compliance requirements.
Customize Policies for Compliance:
Healthcare? Make sure HIPAA fines are covered.
Retail? Ensure payment fraud and PCI DSS compliance issues are included.
Adjust Coverage as Your Business Grows:
Update coverage annually to reflect new risks, tech upgrades, and regulatory changes.
9. Regularly Update & Reassess Your Policy
Cyber threats evolve constantly—so should your insurance.
Schedule Annual Policy Reviews:
Ensure your policy covers new risks and evolving cyber threats.
Update Coverage When You Deploy New Technology:
If you adopt cloud computing, AI security tools, or remote work policies, update your insurance to cover new risks.
Cyber insurance isn’t just a safety net—it’s a strategic tool to protect your business from financial devastation. By assessing your risks, implementing strong security, and choosing the right coverage, you can mitigate financial losses and operational disruptions when cyberattacks occur.
Join us on February 26th for an exclusive webinar with Chubb Insurance and IMA to learn more about choosing the right cyber insurance policy for your business.