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What Is Cyber Insurance
Cyber insurance is a type of commercial insurance that helps protect businesses and individuals from the financial consequences of cyber attacks, data breaches, and other online threats.
Flaws of Cyber Insurance
While cyber insurance can provide valuable protection, there are also some limitations and potential flaws to be aware of:
- Coverage gaps: Cyber insurance policies can vary significantly in terms of the coverage they provide. Some policies may have exclusions or limits on certain types of losses or damage, and it's important to carefully review the terms of the policy to understand what is covered and what is not.
- High deductibles: Cyber insurance policies may have high deductibles, meaning that the policyholder is responsible for paying a significant portion of the loss before the insurance coverage kicks in. This can make it challenging for smaller businesses or individuals to afford the coverage.
- Difficulty in assessing risk: Cyber risk can be difficult to accurately assess, as the constantly evolving nature of online threats means that new vulnerabilities and risks can emerge at any time. This can make it challenging for insurers to accurately price cyber insurance policies.
- Lack of industry standards: The cyber insurance market is still relatively new and there are currently no industry-wide standards for what should be included in a cyber insurance policy. This can make it difficult for policyholders to compare policies and understand the level of protection they are getting.
Overall, it's important for businesses and individuals to carefully consider their specific cyber risk profile and to work with a trusted insurance consultant who is independent of any insurance broker, company, or lobbyist, does not earn commissions by selling cyber insurance, and has skin in the game when a loss happens. It is also important to understand the insurance claiming process of a cyber policy.
Business Cyber Insurance: Protecting Companies Against Digital Threats
In today’s digital-first economy, business cyber insurance is no longer optional—it’s essential. Cyberattacks don’t just target large corporations; small and medium-sized businesses (SMBs) are increasingly becoming prime targets due to weaker defenses. A single data breach can result in financial losses, regulatory fines, reputational damage, and even business closure. That’s where cyber insurance steps in.
What Is Business Cyber Insurance?
Business cyber insurance is a specialized policy designed to protect companies against the financial consequences of cyber incidents such as:
- Data breaches (customer or employee information exposed)
- Ransomware attacks demanding payments to restore systems
- Business interruption caused by a cyber event
- Fraudulent fund transfers or phishing-related losses
- Third-party liability if customer or partner data is compromised
Unlike standard liability insurance, business cyber insurance focuses on digital risks that traditional policies usually exclude.
Why Businesses Need Cyber Insurance
Modern companies rely on digital platforms for nearly every operation—payment processing, customer management, cloud storage, and remote work. With that dependence comes heightened exposure. Some compelling reasons businesses should consider cyber insurance include:
- Rising Cybercrime Costs – Cybercrime is expected to cost the global economy over $10 trillion annually by 2025 (source: Cybersecurity Ventures).
- Compliance & Regulations – Laws like GDPR, HIPAA, and PCI DSS make data protection a legal requirement. Non-compliance can trigger massive fines.
- Reputation Protection – A well-handled cyber breach, backed by an insurance policy, can reduce PR fallout.
- Access to Experts – Policies often include 24/7 access to incident response teams, forensic investigators, and legal consultants.
How Business Cyber Insurance Supports Risk Management
While cyber insurance won’t prevent an attack, it complements cybersecurity measures by transferring some of the financial risks. Smart businesses approach it as part of a layered defense strategy, which typically includes:
- Strong cybersecurity practices (firewalls, encryption, employee training)
- Regular risk assessments by a cyber insurance consultant
- Incident response planning combined with insurance-backed coverage
When combined, these elements help ensure that businesses can recover faster and with minimal disruption after a cyber incident. Learn more about cyber resilience.
Choosing the Right Cyber Insurance Policy for Your Business
Not all policies are created equal. Businesses should carefully review:
- Coverage scope – Does it include first-party and third-party damages?
- Exclusions – Many policies exclude insider threats or outdated system vulnerabilities.
- Claim limits – Ensure limits reflect the true cost of potential downtime or data loss.
- Support services – Some insurers provide breach coaches, forensic IT experts, and legal advisors.
Working with a cyber insurance consultant to perform an insurance audit can help businesses tailor policies to their unique risks.
Cyber CAT Bonds
The first cyber CAT Bond was issued in January 2023 by Beazley and in the amount of $45 million. DeshCap's MD Fred Barnachawy was interviewed on the topic by NeuGroup alongside the CEO of Aon Securities and the Chairman of Willis Global Cyber and other executives in insurance and capital markets. Here is the published article. While there are advantages for such issuance in terms of Cyber capacity, questions remain around the true level of protection offered to corporates.
Cyber Insurance Cost
0.15% to 3% is the average range for Cyber Insurance Cost, which is stated as Cyber Insurance Premium as a percentage (%) of the protection amount or cyber insurance limit. Note that the cost of cyber insurance will vary based on complexity, size, IT and security controls, and other factors related to the business.
Cyber Liability Insurance for Small Businesses
In today’s digital world, small businesses are increasingly targeted by cyberattacks, making cyber liability insurance a critical safeguard. This insurance covers expenses related to data breaches, ransomware attacks, and other cybersecurity incidents, including legal fees, notification costs, data recovery, and reputational damage control. Small businesses are particularly vulnerable, as they often lack the extensive security infrastructure of larger organizations. Cyber liability insurance offers peace of mind, ensuring your business can recover quickly from a cyber event without financial devastation. Affordable and scalable, these policies can be customized to fit your business’s size, industry, and specific risks. Don’t let a cyberattack derail your success—invest in cyber liability insurance to protect your operations and customer trust.
Cyber Insurance Consultant
A cyber insurance consultant helps businesses navigate the complexities of protecting against cyber threats, offering expert guidance on finding the right coverage. With the rise in data breaches, ransomware, and cyberattacks, it’s crucial to have a tailored cyber insurance policy that addresses your specific risks. A cyber insurance consultant evaluates your business’s vulnerabilities, compares policies, and ensures you have the right protection against financial losses due to cybercrime. Safeguard your digital assets and secure peace of mind with the help of a professional cyber insurance consultant today, contact us.