I’ll be honest with you, in many cases, business insurance isn’t cheap. But why should it be? You’re protecting so many assets that, if lost, could completely crumble your business. It’s fair enough to ask why it should be so costly, but try thinking of it this way: could your business afford to handle a breach? The answer is probably not. So here are some of the key reasons as to why cyber liability insurance in particular is so expensive.
1. It’s very tailored
Business insurance, and in particular cyber liability insurance, is designed to meet the needs of every business in completely different ways. The amount of thought and effort that goes into a business insurance policy compared to a health or travel insurance policy is astronomical. There are so many factors that can impact the cost of your premium, which is one of the reasons why prices are a little steeper than what you might expect.
2. It’s new to the market
Cyber liability insurance as a concept is really only a few years old. Because of this, and because it can be so hard to put a price on digital assets, it’s still difficult for insurers to really assess the value of a policy. We often see this with insurance products as they’re introduced and as they evolve (particularly amidst the insurtech space), and as time goes on, things become clearer and more straightforward. However, while it’s still a fairly new product, premiums are a little higher than they probably will be further down the track.
3. There’s so much at stake
The breach of company or customer data is a great deal more costly than a broken down car. And consequently, the cost of rectifying any issues is far more expensive. Cyber liability insurance often covers preventative measures such as security software, as well as damage control procedures such as alerting members about the breach, legal fees and other risk management costs that arise.
4. You’re insuring a higher value
This is actually the main reason why cyber liability insurance (and all other business insurance products) are so expensive. You’re insuring a higher amount, so premiums cost more. Obviously insurance companies need to make a profit, and the cost of covering one cyber liability incident would end up costing insurers such a large amount that the premiums they charge must provide the income they need to stay afloat.
At the end of the day, yes, insurance for your business can seem like a high price to pay. But the value and protection that it provides if something does go wrong far outweighs the cost you must pay. If you are concerned about price, consider comparing policies online or speaking to an insurance broker to help lower the costs.