Cyberthreats are on the rise, and no business is completely safe from the risks of data breaches, ransomware attacks, or phishing scams. These incidents can lead to financial losses, operational downtime, and damage to a company’s reputation, making cybersecurity insurance an essential layer of protection for any business.

Cybersecurity insurance helps businesses handle the costs associated with cyberattacks, from recovering lost data to dealing with potential legal claims. Understanding the costs and benefits of this type of coverage is key to making informed decisions about safeguarding your business.

Related Article: What Is Cybersecurity Insurance?

What Factors Determine the Cost of Cybersecurity Insurance?

The cost of cybersecurity insurance can vary widely based on several key factors. Understanding these elements will help you make informed decisions about the right coverage for your business.

Business Size and Revenue

Larger businesses with higher revenues typically face greater exposure to cyber threats, which can increase insurance premiums. Insurers assess the scale of your operations and the potential financial impact of a cyberattack when calculating costs.

Industry Type

Certain industries are at higher risk of cyberattacks, influencing the cost of coverage. For example:

• Healthcare: Handles sensitive patient data, making it a prime target.
• Retail and eCommerce: Often store payment information that hackers seek.
• Finance: Involves high-value transactions and confidential data.
  Insurers adjust premiums based on the risks associated with your industry.

Type of Data Handled

The kind of information your business stores and processes also affects your premium. Sensitive data, such as personal identifiers, payment details, or proprietary information, raises the stakes in the event of a breach. The more sensitive the data, the higher the insurance costs are likely to be.

Level of Cybersecurity Measures Already in Place

Businesses with robust cybersecurity practices may benefit from lower premiums. Insurers evaluate your current security measures, such as:

• Firewalls and antivirus software.
• Employee training on cyber threats.
• Data encryption protocols.

Demonstrating a proactive approach to mitigating risks can reduce your insurance costs.

Policy Limits and Coverage Scope

The extent of coverage you choose directly impacts the price. Key options include:

• First-party coverage: Protects your business from direct losses, such as data recovery or business interruption.
• Third-party liability: Covers legal claims or settlements if a cyberattack affects clients or partners.

Higher policy limits and comprehensive coverage typically come with increased premiums but provide broader protection.

Typical Cost Ranges for Cybersecurity Insurance in Canada

The cost of cybersecurity insurance varies depending on your business size, industry, and coverage needs. While specific premiums will depend on your unique circumstances, the following estimates can provide a general idea of what to expect.

Small Businesses

For small businesses with limited revenue and moderate data exposure, cybersecurity insurance premiums typically range from $500 to $2,000 per year. Policies in this range often include:

• Basic first-party coverage for costs like data recovery and business interruption.
• Limited third-party liability for legal claims related to data breaches.

These plans are well-suited for businesses such as independent retailers, small professional service firms, or startups handling minimal sensitive data.

Related Article: 3 Biggest Risks for Your Small Business in Toronto

Medium-Sized Businesses

Medium-sized businesses, which often manage larger volumes of sensitive information and face higher risks, may see annual premiums ranging from $3,000 to $10,000 or more. Coverage options in this range might include:

• Comprehensive first-party coverage for data breaches, ransomware payments, and operational disruptions.
• Expanded third-party liability for lawsuits, regulatory fines, and penalties.

Industries such as healthcare, finance, and eCommerce are likely to fall into this category due to their heightened exposure to cyber threats.

Examples of Common Policy Types and Costs

1. Basic Coverage for Small Businesses
   • Cost: $500–$1,000 per year.
   • Covers: Data breach notification expenses, basic data recovery, and limited third-party liability.
2. Mid-Tier Policies for Medium-Sized Businesses
   • Cost: $5,000–$8,000 per year.
   • Covers: Extensive first-party coverage, cyber extortion/ransomware protection, and higher liability limits.
3. Comprehensive Coverage for High-Risk Businesses
   • Cost: $10,000+ per year.
   • Covers: Regulatory penalties, reputational harm coverage, and crisis management support.

While these figures provide a general guide, actual costs will depend on factors such as your business’s security measures, industry risk profile, and desired policy limits. Marathon Insurance can help you navigate these options, ensuring you find coverage that balances cost with the protection your business needs.

What Does Cybersecurity Insurance Cover?

Cybersecurity insurance provides crucial financial support when your business faces the fallout of a cyberattack. Coverage typically falls into three main categories, ensuring both immediate recovery and protection from longer-term liabilities.

First-Party Expenses

These are direct costs your business incurs as a result of a cyber incident. Common examples include:

• Data Recovery: Covers expenses for restoring lost or compromised data after a breach or ransomware attack.
• Business Interruption: Provides compensation for revenue lost due to downtime caused by cyberattacks.
• Ransomware Payments: Helps with the cost of paying ransoms, though insurers may encourage alternatives like negotiation or recovery efforts.

First-party coverage ensures your business can quickly resume operations with minimal financial strain.

Third-Party Liabilities

Cyberattacks can also affect your clients, partners, or other external parties, exposing your business to lawsuits or fines. Third-party coverage addresses:

• Legal Claims: Protection against lawsuits from customers or partners whose data was compromised.
• Regulatory Fines: Coverage for penalties imposed by authorities for non-compliance with data protection regulations.
• Settlement Costs: Financial support to resolve claims or lawsuits without draining your resources.

This coverage is especially important for businesses that handle sensitive customer information or operate in highly regulated industries like healthcare or finance.

Optional Add-Ons

To address specific risks, many insurers offer additional coverage options, such as:

• Reputational Harm Coverage: Helps with the cost of managing public relations and repairing brand damage after a cyber incident.
• Regulatory Investigation Costs: Covers expenses related to investigations or audits by regulatory bodies following a breach.

These add-ons are particularly useful for businesses that rely heavily on customer trust or are subject to stringent industry regulations.

Related Article: Dispelling 4 Common Cyber Insurance Myths

How to Reduce Cybersecurity Insurance Costs

The cost of cybersecurity insurance doesn’t have to break the bank. By taking proactive steps to demonstrate that your business is serious about reducing its cyber risk, you can often negotiate better rates. Here are some effective ways to lower your premiums:

1. Implement Strong Cybersecurity Practices

Insurance providers reward businesses that actively reduce their risk of cyberattacks. Strengthening your defences can significantly impact your premiums. Key practices include:

• Firewalls and Antivirus Software: Protect your network from unauthorized access and malware.
• Employee Training: Educate staff on recognizing phishing scams, creating secure passwords, and adhering to cybersecurity protocols.
• Data Encryption: Secure sensitive data to minimize the damage if it is intercepted or stolen.

A well-protected business poses less risk, which insurers take into account when determining premiums.

2. Bundle Insurance Policies with Marathon Insurance

Combining multiple insurance policies—such as cybersecurity, general liability, and commercial property insurance—into a single package can result in discounts. 

Marathon Insurance offers bundling options that help reduce overall costs and simplify policy management. By consolidating your coverage with one trusted provider, you can achieve cost savings while ensuring comprehensive protection.

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3. Regularly Review and Update Cybersecurity Policies

Staying ahead of evolving cyberthreats is crucial for keeping your business safe and maintaining lower premiums. Insurers value businesses that demonstrate an ongoing commitment to improving their cybersecurity posture. Regular reviews might include:

• Updating software and security tools to address new vulnerabilities.
• Performing routine risk assessments to identify and address weak points.
• Documenting and implementing incident response plans to minimise downtime in the event of an attack.

Showing insurers that you are consistently reducing your exposure to cyber risks can make you eligible for lower rates.

Securing Your Business for the Future

Cybersecurity insurance is no longer a luxury—it’s a necessity in this digital age. With the growing prevalence of cyberattacks, businesses of all sizes need reliable protection to safeguard their finances, operations, and reputation. 

From covering data recovery and business interruptions to shielding against lawsuits and regulatory fines, cybersecurity insurance offers invaluable support when your business faces unexpected challenges.

At Marathon Insurance, we understand that every business has unique needs. We are here to help you challenge the options, ensuring you find a policy that provides the right balance of coverage and cost. With over 30 years of experience and partnerships with top insurance providers, we are dedicated to protecting what matters most to you.

Don’t wait until it’s too late. Contact us today for a free consultation or quote. Act now and secure your business against cyberthreats.