How to Choose Cyber Insurance: A Guide for Small & Mid-Sized Businesses

A 2021 survey from CNBC found more than half of small business owners (56%) said they were unconcerned about a cyber attack, while only about one in four (26%) said they had cybersecurity insurance.

While small and mid-sized businesses (SMBs) may feel like they aren’t as likely to be targeted because of their size, national cybersecurity experts agree that they are increasingly in the crosshairs of hackers.

For example, a 2022 report by Coveware, a company that helps victims recover from ransomware attacks, found 82% of ransomware attacks go after small businesses. The risk is high for SMBs that digitally handle personal information like customer credit card numbers, employee payroll information, and more.

The expenses from a cyber attack can add up if a business needs to cover costs like:

• Revenue loss due to not being able to do business as a result of the attack.
• Notification of those affected by the attack and other necessary entities (regulatory agencies, news media, etc.).
• Credit monitoring for those whose data was affected by the attack.
• Potential litigation resulting from the attack.
• Potential fines from regulatory agencies.
• Negotiation or ransom payments resulting from a ransomware attack.

The Hiscox report found the median cost of a cyber attack for small businesses is $8,300. Some can cost much more — the 2023 Cost of a Data Breach Report from IBM reported that data breaches affecting companies under 500 employees have an average cost of $3.31 million.