For the current top cyber insurance companies in the USA, click this link.
The rapid pace of digital transformation within businesses in recent years has also given rise to unique and evolving cybersecurity challenges, which have prompted companies to find new ways to protect themselves from damaging attacks.
For many US-based businesses, cybersecurity insurance has become a popular tool for managing risk. Recent figures from Statista show that of all cyber insurance premiums written in the country, more than three-fourths are under corporate insurance. The database firm also estimates that the cybersecurity insurance sector will grow into a $20 billion industry by 2025.
This growth, however, will be triggered mainly by the rise in the number and severity of cybercrimes – including data theft, system hacking, ransomware extortion, and denial of service attacks – especially among businesses that handle sensitive information.
“Cybercrime is very opportunistic,” Nathan Little, vice-president of digital forensics and incident response at cyber risk management firm Tetra Defense, told consumer information website NerdWallet. “Every company, no matter what the size, is an opportunity for a cybercriminal to make some kind of money.”
But as cyber incidents increase in complexity, cybersecurity insurance providers are also making sure that they are offering businesses coverage that matches their changing needs.
Cyber insurance is designed to protect businesses against financial losses resulting from cyber incidents. Policies typically provide two types of protection, namely first-party and liability coverage. Here’s what these different types of coverages pay out for.
This type of coverage pays out for the financial losses the business incurs due to a cyber incident, including the cost of responding to a data breach, restoring and recovering lost or damaged data, lost income resulting from business interruption, ransomware attack payments, and risk assessment of future cyberattacks. Most policies also cover the cost of informing customers about the incident and providing clients with anti-fraud services.
Also referred to as third-party liability coverage, this provides financial protection against lawsuits filed by third parties, including customers, employees, and vendors, for damages caused by a cyberattack on the business. Policies typically cover court and settlement fees, and regulatory fines.
Read more: Cyber insurance claims explode in severity
The cost of cybersecurity insurance premiums is determined by a range of factors, including the size, nature, and location of the business. Data gathered by the small business information resource website AdvisorSmith shows that the average cost of cyber insurance in the US in 2020 was $1,485 annually. The firm, however, noted that due to the spate of cyberattacks in 2021, premium prices are likely to soar as well. Here are the states where cyber insurance premiums cost the most and the least, according to AdvisorSmith’s data.
States with the most expensive cybersecurity insurance
State |
Annual average premiums |
Difference from national average |
---|---|---|
Minnesota |
$1,708.11 |
15.03% |
Arkansas |
$1,646.50 |
10.88% |
West Virginia |
$1,629.64 |
9.74% |
Louisiana |
$1,623.94 |
9.36% |
New York |
$1,616.70 |
8.87% |
New Jersey |
$1,615.25 |
8.77% |
Connecticut |
$1,593.62 |
7.42% |
Kentucky |
$1,587.10 |
6.88% |
Arizona |
$1,581.50 |
6.50% |
Ohio |
$1,553.68 |
4.63% |
Source: AdvisorSmith
States with the least expensive cybersecurity insurance
State |
Annual average premiums |
Difference from national average |
---|---|---|
Michigan |
$1,339.33 |
-9.81% |
New Mexico |
$1,355.36 |
-8.73% |
Massachusetts |
$1,380.59 |
-7.03% |
South Carolina |
$1,398.83 |
-5.80% |
North Carolina |
$1,421.49 |
-4.27% |
Wyoming |
$1,426.89 |
-3.91% |
California |
$1,430.18 |
-3.69% |
New Hampshire |
$1,431.99 |
-3.57% |
Illinois |
$1,434.59 |
-3.39% |
Delaware |
$1,446.47 |
-2.59% |
Source: AdvisorSmith
To find out the best insurance companies in the country offering cybersecurity protection, AdvisorSmith considered a range of factors that “reflect an insurer’s financial strength, customer satisfaction, and ease-of-use.” The resource website then used its proprietary algorithm to calculate the scores, with a rating of 5.0 being the highest. Here are the insurance providers that came out on top.
Rank |
Insurer |
AdvisorSmith rating |
Policy name |
Key coverage features |
---|---|---|---|---|
1 |
4.9 |
Cyber Security Insurance |
|
|
2 |
4.8 |
Cyber Enterprise Risk Management (Cyber ERM) |
|
|
3= |
4.7 |
CyberEdge |
|
|
3= |
The Hartford |
4.7 |
CyberChoice |
|
5 |
4.6 |
Cyber Insurance |
|
|
6= |
4.5 |
Arch Netsafe 2.0 |
|
|
6= |
4.5 |
Cyber Advantage |
|
|
8 |
4.4 |
Privacy Breach Coverage |
|
|
9= |
4.3 |
Axis Cyber Insurance (ACI) |
|
|
9= |
4.3 |
Beazley Breach Response (BBR) |
|