Cyber insurance

Cyber insurance is a specialist type of business insurance focused on the cyber security of your business. It can help to cover your costs and losses if your business falls victim to a:

• Data breach
• Security failure
• Illegal threat
• Cyber attack

In the event of a cyber attack, it can also help to cover the cost of additional business expenses as well as data recovery costs and public relations costs.

Such risks include cyber crime, which can take many forms. Fortunately, Hiscox insurance covers computerised attacks designed to disrupt or prevent access to a network, device or system.

An unsuspecting employee might click a malicious link, locking everyone out of the email system – this is known as phishing. Alternatively, a hacker could manipulate website databases via SQL injection or use ransomware to demand large sums of money.

Digital threats can also arise from within your business – an employee may accidentally share sensitive customer data, for instance.

Any business, contractor or freelancer using the internet as part of their work could fall victim to cyber crime or face a data breach which insurance might help to resolve.

This means enterprises of all shapes and sizes could stand to benefit from cyber insurance. Nonetheless, certain professions may have a greater need than others.

If your business operates primarily online or you handle large amounts of information, then cyber cover could play an important role in risk management.

A marketing agency which experiences accidental data loss may face a privacy complaint leading to steep legal fees, for instance.

Meanwhile, an IT consultant who relies on multiple software packages could lose income if these are locked by ransomware.

Management consultants and accountants could require reputational support if a cyber attack impacts their public image, while insurance brokers may incur additional expenses as they race to recover a compromised system – all kinds of professions can benefit from having the right cyber cover in place.

Around two-thirds of companies (64%) now have cyber insurance, according to the Hiscox Cyber Readiness Report 2022.

Our report shows that more than 48% of businesses reported a cyber attack between 2021 and 2022. The stakes are getting higher, too. The median cost of an attack rose 29% to just under $17,000 US dollars, according to the report.

These problems can affect businesses of all sizes. Start-ups may encounter social engineering trickery, such as phishing, as soon as they begin communicating digitally.

Likewise, any company with a website could experience hacking – and data breaches could affect their very first spreadsheet.

This means it may be prudent to consider cyber security, and relevant insurance, from the early days of doing business.

The optimal amount of cyber cover for your business depends on how much it would cost to get back on track after a worst-case-scenario cyber attack or data breach.

This approach can help to ensure you aren’t left with insufficient funds in the event systems go down for an extended period, or criminals make a big ransom demand.

Understanding the nature of cyber threats may help you to recognise the extent of risk to your business.

The Hiscox Risk Academy could help with this – it’s an online risk assessment platform with cyber training that our cyber policyholders receive automatic access to.

At Hiscox, we know the impact of cyber security events can be wide-reaching, so our insurance provides cover to match. It spans direct losses to your business, response costs and fees for recovery services.

Your cyber insurance cover includes:

• Protection against privacy investigations
• Help to recover your position where there’s reputational damage
• Forensic investigations to aid data recovery, plus legal advice
• Help notifying regulators after an attack
• Repair or replacement of unusable parts if cyber events damage your equipment
• Indemnity for losses incurred if your supplier faces a breach
• Consultancy support
• Liability support if someone alleges you’ve transmitted a virus
• Support with crime, including hacking, theft and employee fraud
• An optional, customisable business interruption benefit – if your turnover is less than £2.5m

As of 2023, we offer optional financial crime and fraud cover. This offers protection against electronic theft of money or securities belonging to you, and fraudulent use of your electronic identity, for example taking out a credit card in your name.

There is also an option to add cover for income loss due to interruption resulting from a data breach or cyber attack.

For businesses with annual turnovers of less than £2.5m, this is available in the form of a daily business interruption benefit with cover for 30 days. If your annual turnover is above £2.5m we may be able to pay for your loss of income or increased costs of working.

You can apply to take out a Hiscox cyber insurance policy for businesses across a wide range of areas, from accountancy to construction and telecoms to transport. We work with businesses across:

• accountancy
• advertising and marketing
• construction
• consultancy
• education
• manufacturing
• publishing
• recruitment
• technology
• telecoms
• transport.

Another factor we consider is the size of your business.

If your business has an annual turnover of less than £2.5m, then you may enter into a slightly different product pathway if you add optional cyber interruption cover.

This means:

• Small businesses with turnovers below £2.5m are eligible to receive a daily interruption benefit for 30 days.
• Larger businesses with turnovers above £2.5m are eligible to receive payment from this optional cover in another way. This might include paying directly for your loss of income or increased costs of working.