A Small Business Primer on Cyber Insurance In 2025

Cyber insurance has become an essential safeguard for small businesses. As cyber threats escalate, insurers are tightening requirements, making it crucial for businesses to understand the evolving landscape.

Why Cyber Insurance Matters

Small businesses are increasingly targeted by cybercriminals due to often limited security measures. Cyber insurance provides financial protection against incidents like data breaches, ransomware attacks, and business interruptions. Coverage can include costs for data recovery, legal fees, customer notifications, and reputation management.

The risk is real and not to be ignored. Forty seven percent of companies with less than $10M in annual revenue were attacked in 2024. However, 59% of SMB owners foolishly think they’re “too small” to be attacked. Further, just 17% of SMBs have cyber insurance, yet SMBs paid an average of $330,000 for ransoms in 2024. (1)

Premium Trends

Between 2021 and 2022, cyber insurance premiums surged dramatically—rising by 79% in Q2 2022 alone—driven by a spike in ransomware attacks and increased claims. However, by late 2023 and into 2024, premiums began to stabilize and even decrease. Reports indicate a 6% drop in global cyber insurance prices in Q1 2024, following a 2–3% decline in late 2023. This shift is attributed to improved cybersecurity practices among businesses, such as the widespread adoption of multifactor authentication, and a more competitive insurance market. (2)

Claim Acceptance and Coverage Challenges

While premiums have stabilized, the complexity of cyber threats has led to more stringent underwriting processes. Insurers are now demanding detailed information on cybersecurity measures and may deny coverage to businesses lacking adequate protections. For instance, businesses without proper documentation or necessary controls have faced outright denials. (3)

Moreover, even with policies in place, some businesses have found their coverage insufficient. The 2024 ransomware attack on UnitedHealth Group’s Change Healthcare subsidiary highlighted significant gaps in cyber insurance coverage, leaving many healthcare providers uncertain about their protection against large-scale attacks. In fact, many discovered that their cyber insurance policies did not fully cover the losses incurred, exposing significant coverage gaps in the industry. (4)

Key Requirements for Coverage

Insurers now demand robust cybersecurity practices before issuing policies. Key requirements include:​

• Multi-Factor Authentication (MFA): Implementing MFA across all user accounts is often mandatory, as it significantly reduces unauthorized access risks.
• Endpoint Detection and Response (EDR): Advanced endpoint protection helps detect and respond to threats in real-time, making it a critical component for coverage eligibility.
• Employee Cybersecurity Training: Regular training programs educate staff on recognizing and preventing cyber threats, addressing the human element of cybersecurity.
• Data Backups: Maintaining secure, offline backups ensures data can be restored after an incident, minimizing downtime and data loss.  As a best practice, backups should be immutable and separated from the production network by an air gap.

Understanding these trends is vital for small businesses aiming to secure adequate cyber insurance coverage in an increasingly complex digital landscape.

Dynamic Edge Can Help

Since 1999, Dynamic Edge has helped hundreds of small and mid-sized businesses maximize the return on their technology investment. Our graphic designers create effective websites that power our small business clients. Contact us today for a free network assessment, so that we may help you implement cost-effective security solutions to keep your organization and its clients safe and productive.Our Help Desk features friendly, experienced engineers who answer calls live and solve more than 70% of issues on the first call.