How Much Does Cyber Insurance Cost?

Have you recently started your own business and are considering investing in cyber insurance?

Well, that’s an excellent decision, as Aussie businesses are increasingly exposed to cyber threats. Especially small companies!

In fact, recent research revealed that 43% of cyberattacks target small businesses in Australia. What’s more, only 5% of them are protected, leaving the rest highly vulnerable to data breaches and other cyber threats.

Now, the average cost of a data breach in Australia is $3.35 million.

So, compared to this, cyber liability insurance costs might seem inconsequent.

But how much does cyber insurance cost in Australia exactly?

That’s what we’ll learn in this article. 

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Who Needs Cyber Liability Insurance?

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Well, the short answer is everyone. No matter the size of your business, if you store clients data, enable digital transactions, or use online communications to talk to your customers or suppliers, you can become a target for cybercriminals. 

In fact, increasingly sophisticated hackers tend to target small and medium-sized companies the most because they often don’t have a big budget to protect their data, systems, and networks, allowing cybercriminals to easily find and exploit vulnerabilities. 

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First-Party vs. Third-Party Cyber Insurance

There are two types of cyber liability insurance because when a cybercriminal attacks a company, it could also compromise its suppliers’ or clients' networks and systems.

So, the level of cover you purchase depends on your individual situation and needs.

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First-Party Cyber Liability Insurance

First-party cyber liability insurance is designed to protect your company. Most policies will cover the following:

• Forensic analysis designed to identify the source of the attack
• Public relations services including reputation management campaigns
• Notification of affected customers or clients
• Credit monitoring services
• Loss of income due to the cyberattack
• Communicating with affected customers
• Credit monitoring
• Other recovery activities

Of course, this isn’t an exhaustive list, and you should discuss with your insurance company to review what your policy covers.

Third-Party Cyber Liability Insurance

Third-party cyber liability insurance is designed to protect your company if you make a mistake that leads to a data breach affecting your clients or suppliers. IT consultants and Tech companies typically purchase third-party insurance as the nature of their job exposes them to this type of risk.

Here’s what third-party cyber liability insurance usually covers:

• The cost of hiring an attorney to represent and defend you and your company
• Settlement costs if you can resolve a lawsuit amicably
• If you’re found liable, your third-party cyber insurance should cover court-ordered damages 
• The costs of responding to regulatory enquiries
• Any government fines and penalties

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Common Types of Cyber Liability Claims

Some of the most common cyber threats to Australian businesses include malware, ransomware, phishing, supply chain attacks, social engineering and denial-of-service (DOS) attacks.

Here are some common scenarios for first-party cyber liability insurance:

• A cybercriminal or employee maliciously destroys your data.
• A cybercriminal launches a denial of service (DoS) attack against your company.
• A hacker or employee plants malware, spyware or virus on your computer hard drive.
• One of your employees accidentally destroys or compromises a database.
• A power surge destroys your business server.
• A natural disaster such as a storm damages your computer hardware.
• A hacker holds your customer data for ransom.

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How Much Does Cyber Insurance Cost?

Naturally, there isn’t a one-size-fits-all approach when it comes to assessing how much your cyber insurance will cost your business. It strongly depends on the type of business you own and your level of exposure to cyber threats.

Costs can vary between $500 and upwards of $5,000 a year depending on the amount of coverage you want and other facts listed in the section below.

Now, even though it might seem like a big investment for a small business, remember that 60% of small Australian businesses don’t survive a cyberattack and go bankrupt within six months of the attack.

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What Affects Cyber Liability Insurance Cost in Australia?

Here are the key elements insurers will review before calculating your insurance cost and premiums:

Size and Industry

The industry you operate in is one of the most important factors for company insurance. As mentioned, Tech companies and IT consultants, for instance, can face greater exposure to serious data breaches. Besides, healthcare services hold a large amount of sensitive data, so they’re also often targeted. Other industries include financial services, retail, energy and education, and many others, unfortunately!

Now, size also matters when it comes to cyber risk exposure.

That’s because the more employees you have and the greater the risk of phishing or social engineering attacks you’re exposed to. Phishing attacks refer to a cyberattack where the cybercriminal sends a fraudulent email that looks legitimate and is designed to trick the receiver into opening it. Naturally, the more employees work in your company, the higher the risk of someone opening a fraudulent email.

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• Amount of Sensitive Data

As previously mentioned, healthcare companies or energy providers hold a significant amount of sensitive data, making them ideal targets for cybercriminals.

• Annual Revenue

While this is not always the case, for some insurance companies, the more revenue you generate, the more appealing your company will be to cybercriminals. 

• Strength of Security Measures

Having a proper risk management plan in place and taking preventative cybersecurity measures to prevent and mitigate risks, will help lower your premiums. That’s because, the more proactive preventative measures you take, the lower your risks. On the other hand, not having a solid cyber risk management plan in place and not investing in your cybersecurity will lead to higher premiums as your risk exposure increases.

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Policy Terms

Your deductibles and cover limits will also define your premiums. Cyber liability cover limits usually range between $500,000 and $5 million per cyber incident. Settling for a $500,000 cover limit will naturally cost you less than purchasing a policy that covers you for up to $5 million.

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How to Choose The Right Cyber Insurance For Your Business?

At upcover, we work tirelessly to help protect business owners like you against a range of business threats including cyber security threats. And we know that training your employees on cyber threats and implementing a cyber security risk management plan is a great start but isn’t always enough. 

That’s why we recently launched our cyber & privacy liability insurance. And here’s what it covers:

• Cyber incident response
• Cyber extortion
• Data and application restoration costs
• Cyber crime
• Business interruption.

Want to know more about our cyber insurance prices? Don’t hesitate to get in touch. We’d love to discuss your current cybersecurity strategy and see how we can help!  

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