Cyber Insurance Cost Explained

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Key Takeaways

On average, small businesses pay about $320 a year for data breach coverage, but your exact price will vary based on your risk and coverage needs.**
Have you ever wondered, “How much is cyber insurance?” The cost often depends on your business size, industry and security level, which all play a role in what you’ll pay.
Taking simple security measures, like using multifactor authentication (MFA), updating software regularly and training your team can help reduce your risk and may lower your cyber insurance costs.

How Much Does Cyber Insurance Cost?

Cyber insurance costs will vary because insurance companies look at numerous factors to determine your price. On average, our customers pay about $320 annually for data breach coverage.**

How Are Cyber Insurance Costs Calculated?

Cyber insurance costs are often determined by using a cyber insurance pricing model that looks at your business’ overall risk exposure. Insurance companies consider several different facts like your industry, company size, policy limits and coverage selections to calculate your total premium. They may also consider your security controls and exposure levels to better understand how likely and costly a cyber incident might be for your business.

What Is the Average Cost of Cyber Insurance?

On average, our small business customers pay about $320 per year, or about $27 per month, for data breach coverage.** Keep in mind that your cyber insurance cost per month will vary because every business is unique. Your premium could be more or less than this average. The average annual cost for other core cyber coverages from The Hartford include:**

Additional Core Cyber Coverages	Average Annual Premium**
Response Expense (first party)	$140
Defense and Liability (third party)	$128
Extortion Sub-Limit	$9
Other Options	$43

Cyber Insurance Cost Ranges for Small to Large Businesses

Cyber insurance costs can look very different for a small business compared to a large organization. Bigger companies may need higher policy limits, broader incident response services and more extensive third-party liability coverage. When determining your total cost for cyber insurance, insurance companies may also consider your industry’s risk level, the type of data you handle and your number of employees.

Is Cyber Insurance Tax Deductible?

Like general liability or property insurance, cyber insurance is generally tax deductible because it’s a business expense incurred to help you protect your operations. These premiums are considered part of the overall cost of insuring your business. That’s why they’re typically eligible for deduction. Only business insurance policies qualify, so you can’t deduct personal insurance premiums on your business taxes. Be sure to confirm your specific eligibility with a qualified accountant.

Factors That Influence Cyber Insurance Costs

The cost of cyber insurance is shaped by a variety of business traits and risk indicators. These factors provide a breakdown of the key elements that insurers use to determine pricing.

Company Size and ROI

The size of your business can influence a company’s overall exposure to cyber risks. A larger business with more revenue, endpoints or vendor connections may face broader potential exposure. From an ROI standpoint, businesses may decide the premium is worth it, especially if they expect it can reduce potential losses enough to balance the cost, knowing both can vary.

Type and Amount of Data Managed

Businesses that handle more sensitive data (like PII, PHI or payment information) and larger volumes of records may face higher cyber insurance costs. Data breaches involving these sensitive data types can lead to more expensive notification, response and liability expenses that could raise rates.

Security Measures

Insurers often look for core security measures and controls like multifactor authentication features, regular backups, endpoint detection and response technology (EDR), consistent patching and employee training. These measures signal stronger resilience against cyber incidents and may help improve your pricing.

Claims History/Past Incidents

A business’ past cyber incidents – especially frequent or severe ones – can signal a higher risk to insurers, leading to higher pricing and stricter exclusions or may require higher retentions. These adjustments can help insurance carriers account for the increased likelihood or impact of future losses.

Policy Limits and Deductible

Higher policy limits typically raise insurance premiums, while choosing a higher deductible can lower your cost. Higher limits and more supplemental coverage mean higher premiums, but they also provide increased protection. For example, a company might pay more for a $1 million limit with a low deductible but can reduce its premium by opting for a higher deductible to shift some initial costs back to the business.

Technology and Data Access

Companies with broader technology and data access like remote logins, admin permissions, third-party vendor connections or cloud systems, could see increased cyber insurance costs. Each access point adds more complexity and opportunity for attackers, increasing the perceived risk.

Number of Employees

A larger employee headcount could impact cyber insurance costs, because more people could mean more chances of phishing attempts and internal access risks. Risks are more common in roles like finance or administration that handle sensitive information daily.

Risk Level of Industry

The deductible is the amount you’ll pay out of pocket before your insurance coverage is activated. A policyholder may have a lower insurance cost by increasing their BOP deductible.

Popular Industries We Insure

How To Reduce Your Cyber Security Insurance Costs

If you’re ready to protect your business with cyber insurance, be sure to consider these ways to reduce your costs:

Enhance Cybersecurity Measures

Protecting your business from cyber threats doesn’t have to be complicated. Business owners can reduce cyber insurance costs with a few enhanced security steps, such as:

Turning on multifactor authentication: This feature can help add a second layer of protection so potential hackers can’t access your accounts – even if they steal your password.
Using Modern Device Protection (like EDR): A smarter security system can spot and stop threats on your computers in real-time.
Keeping reliable backups: If something goes wrong, having a backup of your important data can help get your business back up and running again quickly.
Keeping your software updated: Be sure to complete all necessary software updates in a timely manner to prevent weaknesses that hackers could try to exploit.
Training employees to spot scams: Quick, simple training can help employees recognize and report phishing scams, harmful links or fake emails.

Consider Bundled Policies

You can save money on business insurance by bundling essential coverages into one policy. For example, consider adding cyber insurance to your existing Business Owner’s Policy or general liability insurance policy.

Opt for Higher Deductibles

Choosing a higher deductible may help reduce insurance costs up front. Be sure to align your deductible with what your business can reasonably cover with cash on hand if a cyber event occurs.

Is the Cost of Cyber Security Insurance Worth It?

Yes, cyber insurance is worth it. It protects your business financially from expensive cyber incidents, provides immediate access to incident response support and strengthens your overall operational resilience by helping your business recover quickly and confidently.

Trends in Cyber Insurance Costs

Cyber insurance costs and coverage continue to evolve as insurers work to respond to the increased sophistication of cyberattacks. These recent market trends influence what small businesses might pay and how policies are structured:

Ransomware pressure: Ransomware continues to be a major threat, keeping upward pressure on policy premiums and limits. Insurers are being more careful and may charge more for coverage tied to these costly attacks.
Rates hardening or softening: After periods of broad rate increases driven by losses and stricter underwriting, some insurance companies have eased cyber insurance rates for companies that demonstrate strong security measures.
Stricter underwriting: Insurers often require business owners to take stronger security steps, like MFA, backups and regular system updates, before approving coverage or offering better terms.

How To Get an Accurate Cyber Insurance Quote

It’s easy to get an accurate quote for cyber insurance with The Hartford. Get a fast and free online quote or call us at 855-829-1683 today.

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Protect Your Business With The Hartford

Protect your business from today’s growing cyber risks with cyber insurance from The Hartford. This essential coverage can help give you financial protection, real-time support during an attack and greater confidence in your ability to recover after an incident. We’re here to help you get the right coverage for your business’ needs. Get a quote from The Hartford today.

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** Costs, premiums, and coverages mentioned are estimates and are not guaranteed. Actual cost, premium, and coverage are determined at the time of quote or issue and are specific to an individual risk. Premiums are based on information provided to The Hartford, including, but not limited to, underwriting and rating criteria. All examples included on this website or in an advertisement are intended for informational purposes only and are not an offer or a guarantee of premium or coverage. Coverage and products described are subject to the terms and conditions found in the policy contract. Any educational information provided about available coverages does not modify the policy language or imply that any claim is covered. Products are not available in all states or for all businesses.

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