Cyberattacks are more common than ever before. It feels like every week we hear about another major corporation falling victim to a cyberattack. No amount of financial investment or security awareness training can protect against the reality of human error, mistakes will happen. When they do, the consequences are swift and unforgiving: financial loss, operational paralysis, and overwhelming stress. Cyber insurance will help provide some much-needed relief in these moments.
This post will clarify cyber insurance for those unfamiliar or unsure of it. Having worked with many businesses in both pre- and post-claim scenarios has helped me develop a deep appreciation for this often-misunderstood coverage. Despite its relevance, many brokers unfortunately still view cyber insurance as a niche product. To help combat this, we'll discuss why cyber insurance is necessary, disprove some common myths, provide advice on choosing an educated broker, and discuss how we can expect this coverage to evolve in the future.
The primary reason to invest in any insurance product is the peace of mind that it will be there when you need it. If your company experiences a cyberattack, cyber insurance can help you recover quickly and effectively. Here’s how it could work in four key areas:
Response Time:
Running a business is busy enough without having to continue operations during a crisis. The last thing you need is to be wasting time hunting down legal experts, specialists, or PR support while trying to keep everything running. The good news is that many policies offer direct access to these types of resources for free. This saves you the headache of finding help and guessing how much it’ll cost. The quicker you can investigate and contain the breach, the better.
Financial Cost:
Recovering from a cyberattack can get expensive very quickly. Between forensic investigations, restoring systems, lost income, legal fees, and letting customers know what happened, these costs could take years to recover from. If your business handles sensitive data, you might also have to deal with fines or lawsuits if that data gets compromised. While cyber insurance isn’t a fix-all solution, it can cover many of these expenses above.
Operational Downtime:
For businesses that rely heavily on technology, even a short outage can significantly impact their revenue. Traditional property insurance might cover interruptions from physical damage (like fire or floods), but it won’t help if your systems go down because of a cyberattack.
Unfortunately, the bills don’t stop just because your business does. Cyber insurance can cover the income lost during this downtime so your business can stay afloat while you recover. Just note that many policies have a minimum time-offline period before this coverage kicks in, so make sure to go over the details with your broker.
There are a lot of misconceptions about cyber insurance that lead to uneducated opinions being formed. A few of them that routinely come up routinely are:
“We Have Good Cybersecurity, We Don’t Need Insurance”
There’s no denying that having strong cybersecurity measures are critical. (In fact, most cyber insurers require a certain level of security before they even give you a quote.) But realistically, no system is 100% secure. Cybercriminals' tools and tactics are constantly evolving, and even the best defenses can’t guarantee 100% protection, especially when human error is taken into consideration. Cyber insurance isn’t meant to replace good security, it compliments it as a backup.
“Only Big Companies Need Cyber Insurance”
A lot of small and medium-sized businesses think they’re too small to be targeted. Hackers actually love attacking smaller businesses. Fewer resources and lighter security make them easy prey. Just because your company isn’t a giant doesn’t mean you’re safe. Cyber insurance is important for businesses of all sizes, especially the smaller ones.
“All Cyber Insurance Policies Are the Same”
Some businesses believe that the small cyber add-on included in their Commercial General Liability policy is enough to protect them. This is not the case. These policies typically exclude most of the common cyber incidents, leaving businesses with a false sense of security. A standalone policy with a reputable market should be the bare minimum. Sadly, most companies only discover this gap after they’ve already been breached, which leads us nicely into the next topic.
Picking the right broker for your cyber insurance can feel like a large task. While plenty of brokers focus on certain industries, far fewer specialize in specific types of coverage. Finding a good broker who specializes in cyber insurance is key. They will provide you with ideal coverage for your business, help explain why strong security measures are your first line of defense, and break down your policy in easy-to-understand terms. Look for someone who understands the cybersecurity industry and is ready to walk you through what might otherwise feel like an overwhelming process.
As cyber threats keep changing, cyber insurance will need to keep up too. Here’s where we might be headed:
More Regulation:
As cyberattacks become more common, governments are getting more involved in regulating cybersecurity practices. In the future, we could see businesses required to have a certain level of cyber insurance coverage to meet compliance, especially in high-risk industries like healthcare or finance.
Further Collaboration with Cybersecurity Solutions:
We’re already starting to see this happen. Some cyber insurance companies now offer things like MDR services (Managed Detection and Response) and Employee Awareness Training (though usually for an extra cost). In the future, we might see more partnerships between insurers and cybersecurity providers to bundle coverage and security services together into one package.
Next-Gen Threat Models:
The rise of AI-driven attacks is significantly increasing risk for both companies and insurers. Advanced AI tools can craft highly convincing phishing emails or impersonate executives through deepfake technology, making it easier for criminals to breach systems and manipulate their targets. Insurers will likely need to keep refining their policies and pricing to handle these new threats.
Conclusion
Cybersecurity and insurance can feel overwhelming at times. There’s a clear difference between spending money on coverage your company is unlikely to ever need and investing in protection that could save your business from catastrophic financial loss. This is why partnering with professionals who are knowledgeable, reputable, and trustworthy is so important. If you’ve been delaying or are still uncertain about getting a cyber insurance policy, now is the perfect time to consider it. Please reach out if you need any help or guidance.
About The Author
Ethan Webber is a Saskatchewan based Cyber Insurance Specialist. He works with businesses to cut through complexity, understand their cyber risks, and secure coverage that actually fits. He runs an internal cyber insurance program that assesses and improves security postures to ensure his clients are properly protected.
Ethan’s goal is to make cyber insurance simple yet effective. With expertise in coverage options and experience working with reputable carriers, he makes it easy to provide individualized quotes. Outside of the office, Ethan enjoys playing the guitar, unwinding with a novel, and spending some quality time with his family.