Cyber insurance (often called cyber liability insurance) helps cover the costs of responding to cyber incidents such as ransomware, hacking, data breaches and payment fraud. It can provide access to specialist responders and cover costs like investigation, system recovery, business interruption and certain third-party claims—depending on the policy wording.
What is cyber insurance in one sentence?
Cyber insurance is a policy designed to help your business respond to and recover from cyber attacks by covering key response costs, downtime losses and liability exposures where applicable.
What does cyber insurance cover?
Cover varies by insurer and policy wording, but most cyber policies combine first-party cover (your own losses) and third-party cover (claims made against you).
Common first-party cover
- Incident response & forensics: Specialists to investigate, contain and remediate the incident.
- Data and system restoration: Recovering or rebuilding systems and data impacted by malware or unauthorised access.
- Ransomware / cyber extortion support: Expert support to manage extortion events and recover operations (cover depends on wording).
- Business interruption: Lost income and extra expenses caused by downtime following a cyber event (definitions vary).
- Notification and support services: Costs linked to informing affected individuals and providing support (where required/covered).
- PR and crisis communications: Reputation support to help protect customer trust.
Common third-party cover
- Privacy / data protection liability: Claims arising from loss or exposure of personal data.
- Regulatory response costs: Support with regulatory enquiries following an incident (wording varies).
- Legal defence costs: Solicitors’ fees and defence expenses for covered claims.
- Network / media liability: Certain claims linked to digital content or security failures (policy dependent).
Why is cyber insurance important?
Cyber incidents rarely cost “just the ransom”. The biggest expenses often come from downtime, specialist investigation, recovery work and customer/legal fallout. Cyber insurance can provide both funding and fast access to experts—helping you make decisions quickly when time matters most.
Typical cost drivers cyber insurance can help with
- Forensic investigation to confirm how the attacker got in and what was accessed.
- Operational disruption while systems are restored and staff revert to manual workarounds.
- Legal and regulatory response after suspected unauthorised access to data.
- Customer communication and support services if personal data is involved.
- Payment diversion and fraud where social engineering is involved (policy dependent).
Types of cyber insurance
Most cyber policies blend different protections. The key is understanding what is included, what is optional and what is excluded.
- Cyber liability insurance: Often used as an umbrella term covering first-party and third-party exposures.
- Data breach / privacy cover: Focused on response costs and claims linked to personal data incidents.
- Ransomware / extortion cover: Support tied to extortion events (limits and conditions vary).
- Business interruption cover: Protection for loss of income due to outages following a cyber event.
Who needs cyber insurance?
If your business uses email, stores customer or employee data, takes payments, relies on cloud software, or depends on IT to operate, you have cyber exposure. In practice, most organisations benefit from cyber insurance—especially where downtime would quickly impact revenue.
What cyber insurance usually does not cover
Exclusions vary, but many policies have limitations around:
- Pre-existing incidents that began before the policy started (or were known but not disclosed).
- Failure to maintain declared security controls stated in the proposal (e.g., MFA where declared).
- War / nation-state clauses or broadly defined “hostile acts” exclusions (wording differs by insurer).
- Pure IT maintenance not linked to a covered cyber event.
Tip: Compare policy wordings side-by-side and confirm security requirements up front to avoid surprises.
How to choose the right cyber insurance policy
- Map your biggest exposures: what data you hold, what systems you rely on and your worst-case downtime scenario.
- Check incident response support: 24/7 breach response access can matter as much as the policy limit.
- Confirm business interruption triggers: waiting periods, what counts as “down”, and proof requirements.
- Review social engineering / payment fraud terms: these are often optional or sub-limited.
- Validate security requirements: ensure MFA, backups and patching statements are accurate and sustainable.
Practical steps to reduce cyber risk
- Enable MFA on email, admin accounts and remote access.
- Maintain offline/immutable backups and test restores regularly.
- Patch critical systems quickly—especially internet-facing services.
- Improve email security (SPF/DKIM/DMARC) and train staff on phishing.
- Limit admin privileges and monitor suspicious logins.
- Document an incident plan so roles and steps are clear during an attack.
Frequently asked questions
What is cyber insurance?
Cyber insurance is a policy that helps cover costs and liabilities arising from cyber incidents like ransomware, hacking and data breaches—often including response services, downtime losses and certain third-party claims.
What does cyber insurance typically cover?
Most policies cover incident response, data restoration, ransomware support, business interruption and legal/regulatory support. Exact cover depends on insurer wordings, limits and exclusions.
Does cyber insurance cover ransomware?
Many policies include ransomware/cyber extortion support (forensics, negotiation, recovery) and may cover extortion-related costs subject to the policy terms, conditions and limits.
Does cyber insurance cover business interruption?
Often yes, but the trigger, waiting period and how loss is calculated varies. Check the business interruption wording carefully and confirm what “downtime” means under the policy.
Is cyber insurance required by law in the UK?
No. However, UK organisations must comply with applicable data protection rules (such as GDPR). Cyber insurance can help manage the costs of responding to an incident and related claims.
How much cyber insurance do I need?
It depends on your revenue, the value of sensitive data you handle, your dependency on IT and your worst-case downtime scenario. Many businesses size limits around their most severe credible incident.
What can cause a cyber insurance claim to be declined?
Common reasons include inaccurate proposal information, failing to maintain stated security controls (for example, MFA) or exclusions in the wording. Keeping declarations accurate and controls in place is critical.
How can I reduce cyber insurance premiums?
Insurers typically price more favourably when you have MFA, secure backups, patching, strong email security and documented incident response planning.