Cyber insurance: A necessary part of IT security
For nearly all companies today, obtaining cyber insurance is a standard and necessary part of doing business. However, each company’s risk profile, and the types and scope of cyber coverage available vary widely. How do you find the right cybersecurity insurance?
Cyber insurance – Short & Sweet
- Cyber insurance protects companies from financial losses caused by cyberattacks, data breaches or IT system failures.
- Typical coverage includes data recovery, IT system restoration, business interruption and crisis management costs.
- Premium costs, coverage limits and deductibles are strongly dependent on a company’s ability to defend itself and recover from a cyberattack.
There are two types of companies when it comes to cybersecurity: those that have experienced a cyberattack and those few that haven't. While cyber criminals’ methods are
becoming more sophisticated through the use of AI, ransomware attacks remain one of the most common and financially damaging forms of attack.
According to a Ponemon Institute survey of more than 2,500 IT and
cybersecurity professionals in the United States, Europe, Australia, and Japan, 88% of surveyed organizations experienced at least one ransomware attack in 2024. The
IBM 2025 Cost of a Data Breach Report found that the average cost of a ransomware attack in
2024 was $5.08 million, including the ransom payment, recovery costs, and other indirect expenses.
Yet despite the prevalence and growth of cyber threats and cyberattacks, The Travelers 2025 Risk Index survey found that 46% of small businesses and 21% of mid-sized business lack cyber insurance. Uninsured businesses are in effect operating without a financial safety net in the face of rising dangers.
What does cyber insurance cover?
Cyber insurance typically covers claims stemming from:
- Breaches of information security (confidentiality, integrity, availability)
- Business interruption costs and loss of revenue
- Recovery of IT systems and customer data
- External consulting (technical, legal, crisis management)
- Reputational damage
Insurers providing those types of coverage today also are placing more emphasis on the implementation and documentation of preventative measures. They’re also applying greater scrutiny to risks related to AI misuse, third-party suppliers and cloud platform dependencies.
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How do companies determine their cyber insurance needs?
Cyber insurance eligibility requirements, policies and procedures for small- and mid-sized U.S. businesses differ between underwriters. However, there are a variety of resources that companies can use to assess their risks and obtain coverage that suits their needs. For example:
- The U.S. Cybersecurity & Infrastructure Security Agency (CISA) offers a range of publications, training sessions, and services to help SMBs assess and strengthen their security posture. There’s also a downloadable PDF with recommended cybersecurity and risk management practices.
- The Small Business Administration website provides a list of planning and assessment tools available from other federal agencies, including CISA, the Federal Communications Commission (FCC), the Department of Homeland Security, and the Department of Defense.
- The Cyber Readiness Institute website also has a cyber insurance FAQ and other resources for SMBs.
- Cornell University offers an academic model and tool to help businesses think about optimal budget allocation for cybersecurity vs. residual risk.
Many insurers also provide "state-of-the-art" IT security guidelines for helping smaller companies establish effective IT security measures.
The building blocks of IT security
To qualify for cyber insurance and reduce cyber insurance costs, companies should implement security measures that include the following components:
- Security and risk assessment identifies the risks to critical information systems to establish appropriate safeguards and procedures.
- Systems and procedures: including unified endpoint management (UEM) solutions for centralized inventory, configuration, management and monitoring of hardware and software.
- Programs and practices: Includes systems for updating and monitoring endpoint firewall, antivirus and other security software, and regular, structured patch and update management programs.
- Vulnerability assessments: Regular vulnerability scans and analyses paired with immediate, preferably automated, prevention and remediation are increasingly important for maintaining network security and business continuity.
- Data backup & restoration: Backup protection and testing of restoration procedures are essential for effective incident recovery and resumption of normal business operations.
The baramundi Management Suite UEM system provides comprehensive network transparency and centralized management functions that
address all of those areas. The baramundi system enables automatic inventory of hardware and software, management of endpoint encryption and antivirus protection, automated patch
management, and backup and restoration. Its built-in reporting features also significantly simplify the process of documenting IT assets and security practices to help companies obtain
suitable insurance coverage. In the event of an incident, the Management Suite also makes it faster and more efficient to create the detailed documentation needed to file a claim.
Conclusion: Cyber insurance is a key part of IT risk management
After years of sharp increases in premium costs, the cyber insurance landscape for SMBs today is stabilizing. However, underwriters today have stricter requirements and a keen focus
on a company's cybersecurity posture, i.e., policy costs, coverage limits and deductibles directly reflect the insurer‘s assessment of an SMB's ability to defend against and
respond to cyber threats. Company size, the industry it’s in, and the cyber preparedness of its suppliers and business partners – including managed service providers – are also major
factors affecting coverage
Cyber insurance is a necessary and essential pillar of modern IT risk management that adds a layer of business and financial protection. The bottom line is that SMBs that
document and strengthen their IT security strategy and practices, now not only improve resilience but also gain better coverage options and lower premiums.
