Most modern businesses have an online presence; many store client data and personal information on their internal IT systems. Although having your customers’ data available at the touch of a button is undoubtedly convenient and necessary, it can expose you to cybercrime risk.
A cyber attack is devastating, not only financially and to your reputation, but it can also leave you wide open to legal implications and large fines that are sometimes irrecoverable. For that reason, cyber insurance is an absolute must for any business, large or small.
So, what is cyber insurance, what does it cover and how much cyber insurance coverage does your business need?
What does cyber insurance include?
Cyber insurance is a type of insurance policy designed to protect businesses from financial losses and liabilities associated with cyber incidents and threats. The specific coverage included in a policy can vary widely, depending on the insurance provider and the policy itself.
However, a cyber insurance policy usually includes some common elements, including the following:
- Data breach coverage
- Cyber extortion coverage
- Business interruption coverage
- Legal and regulatory expenses
- Public relations and reputation management
- Forensic investigation
- Third-party liability
- Intellectual property protection
- Social engineering fraud coverage
- Computer virus and malware coverage
It’s important to understand that insurance providers’ coverage and policy limits vary significantly. You should carefully review what your business needs regarding cyber insurance coverage with an expert insurance advisor, such as our team here at Stanmore Insurance.
What does cyber insurance actually pay for?
The specific terms and coverage of a cyber insurance policy vary, depending on the provider and the policy itself, but here are some common expenses that cyber insurance might pay for.
Data Breach Response Costs
- Notification Costs: The cost of informing anyone affected by the data breach, including regulators, customers and other relevant parties.
- Forensic Investigation: Expenses related to finding out what caused the breach and assessing its scope.
- Legal Fees: Costs associated with hiring lawyers to handle the legal implications of a data breach.
Data Loss and Restoration
- Costs related to recovering stolen or lost data.
- Expenses incurred to recover and restore data.
Cyber Extortion
- Ransomware Payments: Coverage to pay a ransom to cybercriminals who have encrypted your business data and demand payment for its release.
Business Interruption
- Loss of income and any expenses resulting from a cyber attack that disrupts your business operations.
Reputation Management
- Any costs associated with managing reputational damage and public relations caused by the data breach.
Regulatory Fines and Legal Penalties
- Coverage for any penalties and fines imposed by regulatory authorities for cyber security standards or non-compliance with data protection laws.
Legal Liabilities
- Costs and settlements related to lawsuits from affected parties, such as business partners or customers.
Network Security and Privacy Liability
- Coverage for liability resulting from a breach of network security or data privacy.
Social Engineering Fraud
- Protection against scams in which employees are tricked into transferring sensitive information or clients’ money.
Unauthorised Access or Insider Threats
- Coverage for incidents involving external hackers or malicious employees.
Who needs Cyber Insurance?
According to the 2025 Cyber Security Breaches Survey, around 43% of UK businesses and 30% of charities have experienced a cyber attack or security breach in the past 12 months.
The risk is higher for larger organisations, with 74% of large businesses and 67% of medium-sized businesses reporting incidents. These figures highlight how likely it is for organisations of all sizes to face cyber threats. If your business trades online, uses email, stores customer data, or maintains a social media presence, having cyber insurance is an important step in protecting your operations and managing potential financial risks.
What amount of cyber insurance does my business need?
The amount of cyber insurance your business needs depends on your industry, business and the type of customer data and personal information you handle. The first thing to do is consider your risk profile, i.e., what damage you would face if you suffered a cyber attack.
For example, if you handle sensitive personal data, like financial information, the damage caused by a data breach will be significant. In contrast, the risk will be much lower if your business processes customer contact details and names. In that scenario, cybercriminals could still misuse the data, but it would cause less catastrophic damage.
When working out their premium, insurance providers consider your business risk profile and the likelihood of a data breach. Generally, insurers offer better premiums to businesses that are data savvy and have taken steps to mitigate the risk of a cyber attack.
The most effective approach is to speak with a cyber insurance professional who can assess your business’s potential liabilities, advise on the coverage you need, and provide guidance on the associated costs.
Questions cyber insurers will ask about your business
When calculating cyber insurance premiums, insurance underwriters assess a business’s risk profile and might ask you the following questions:
- What online security measures are in place (firewalls, encryption, intrusion detection)?
- How is sensitive data (financial, customer, employee) protected?
- Do you have a tested incident response plan for cyber attacks?
- How quickly can normal operations resume after an attack?
- Is cybersecurity training provided for all new employees?
- Does your business comply with industry-specific cybersecurity regulations and best practices?
You should be prepared to answer these questions when reviewing cyber insurance options with an advisor.
Stanmore Insurance for Cyber Protection
For that reason, if your business has an online presence or stores customer and supplier data online, you should have a cyber insurance policy. Call our experienced, expert advisors to discuss your business’s cyber insurance requirements today.