Cyber Insurance
Arguably one of the most important covers for any business or organisation today, cyber insurance can provide protection for a number of events, from a ransomware attack to an employee inadvertently paying a fraudulent invoice. Cyber insurance is something all businesses should be considering carefully.
What is cyber insurance?
Cyber insurance, also known as cyber liability insurance or cybersecurity insurance, is designed to protect businesses against losses arising from cyber attacks, data breaches and technology failures. A cyber insurance policy can also provide invaluable cover when it comes to recovering systems and data, informing stakeholders and, ultimately, getting your business back up and running. Working with experienced cyber insurance brokers helps ensure your policy reflects how your business operates, the data you hold, and the risks you face.
Why do Businesses need cyber insurance?
Cyber insurance is a vital cover for all businesses to consider. Cyber threats are increasing in both frequency and severity. As organisations rely more heavily on digital systems for operations, payments, data storage and communication, exposure to cyber risk continues to grow yet the risk associated with these threats is still often overlooked.
The financial impact of a cyber attack can be detrimental; in 2025, the average cost of a serious cyber attack is around £195,000 per business, with some incidents running into the millions depending on severity and disruption. Protection from cyber insurance can be the difference between a business getting back up and running following a cyber incident, or not.
Whether you rely on technology for operational activities, storing information or for processing sensitive data, these systems are becoming more valuable and vulnerable, which is why all businesses need to assess their cyber risk, and in the event that an attack does happen, look to reduce the impact and potential financial loss.
What can cyber insurance cover? ​
Incident Response
More comprehensive cyber insurance policies often provide access to a 24/7 incident response team, offering guidance using threat intelligence, helping businesses react quickly and effectively following a cyber event. This can include the cost of forensic investigations to identify how the incident occurred, along with legal and regulatory advice to manage reporting obligations, as well as consultants and advisory bodies. Early support is critical in helping limit damage, restore systems and reduce both financial loss and operational disruption.
Cyber Crime Cover
Where insurable by law, cyber insurance looks to reimburse against financial loss arising from cyber crime. This can include losses caused by scenarios such as unauthorised access to IT systems, fraudulent fund transfers, or social engineering attacks where employees are deceived into making payments. In addition to reimbursing financial loss, cyber insurance can provide support to investigate the incident, assist with system remediation and advise on strengthening security controls to help reduce the risk of similar attacks occurring again.
Security & Privacy Breach Costs
Security and privacy breach cover is particularly relevant for businesses that collect, handle or store any personal or sensitive information about customers/service users. Cyber policies may provide access to specialist breach response services, including IT forensic experts, legal advisers, and regulatory consultants. Policies can also look to cover the cost of notifying affected individuals, managing communications with regulators, and offering credit or identity fraud monitoring services.
Liability Costs
Some cyber insurance policies can provide cover for liability arising from a cyber incident, where the business becomes legally responsible for third-party losses. This can include damages and defence costs associated with claims resulting from security failures, data breaches, or the negligent transmission of malware or viruses. Liability cover may respond where customers, suppliers or other third parties suffer financial loss or data damage as a result of the incident. This can help protect balance sheets and manage complex legal exposures.
PR Crisis Management
Reputational damage is often one of the most damaging consequences of a cyber incident. Cyber insurance can include cover for crisis management and public relations support to help protect brand reputation following a data breach or cyber attack. This may involve engaging specialist PR consultants to manage media responses, customer communications and stakeholder messaging. Timely and professional crisis management can play a vital role in maintaining trust, reducing long-term reputational damage and supporting business recovery after a cyber event.
Data Recovery & Recreation
Data recovery and recreation cover can address the cost of restoring or rebuilding data following a cyber incident. Policy wordings vary, with some cyber insurance policies covering the attempted recovery of lost or corrupted data, while others extend to the full recreation of data where recovery is not possible. This can include intellectual property, business records and operational data essential to daily activities. Effective data recovery support helps businesses resume operations more quickly and reduces the operational and financial impact of data loss.
Extortion Cover
Cyber extortion cover applies where a business is threatened with a cyber attack or where an attack is underway and demands are made to stop it. This is commonly associated with ransomware incidents or distributed denial-of-service attacks. Cyber insurance may reimburse ransom payments where legally permitted and can also cover the cost of engaging specialist consultants to manage negotiations and assess the credibility of threats. Having expert support during an extortion event can be critical to reducing financial loss and operational disruption.
System Damage & Business Interruption
System damage and business interruption s cover helps protect income when a cyber incident disrupts operations. Following a data breach or system failure, cyber insurance can cover lost revenue and increased costs of working for an agreed indemnity period. This may also include the cost of IT specialists, forensic experts and consultants needed to identify the cause of downtime and restore systems. Business interruption cover is a core component of cyber insurance, providing essential financial support until normal operations are reinstated.
Interested in cyber insurance?
Preventative measures and support​
A comprehensive cyber insurance policy aims not only to respond to incidents but also to help prevent cyber incidents from happening in the first place. Insurers often partner with specialist cyber security experts to offer practical risk management support, helping businesses identify vulnerabilities and strengthen their digital defences.
Proactive prevention measures could include ongoing access to expert advice, rapid-response support around the clock, threat monitoring tools, and mobile applications that provide alerts on suspicious activity. This proactive approach helps reduce exposure, improve resilience, and support long-term cyber risk management.
Cyber Insurance Claims Journey
Pre-incident support
Some insurance policies provide support with preventative measures to help you identify potential cyber risk areas and help you mitigate against them. This could involve staff cyber awareness training, vulnerability assessments, and looking at your IT security arrangements. Insurers may also assist with developing or refining IT and security policies, often working alongside your existing IT provider to strengthen controls and improve overall resilience.
Initial response
Once a cyber incident is reported, insurers typically activate specialist response teams in order to limit damage and restore systems quickly. Technical experts work to contain the threat, secure networks and address vulnerabilities, while legal and communications advisers help manage regulatory obligations and external messaging. This coordinated response aims to minimise downtime, protect sensitive data, and reduce operational and reputational impact during a critical period.
Access to resources
After the immediate threat is stabilised, some insurers will provide access to specialist resources to investigate the cause and full impact of the incident. Cyber forensic experts can analyse how the breach occurred, while advisers recommend recovery steps such as data restoration, system upgrades and enhanced security measures. This stage focuses on learning from the event and strengthening defences to help prevent future cyber incidents.
Resolution
At the conclusion of the incident, insurers can calculate and settle covered losses in line with policy terms. This may include reimbursement for forensic investigations, IT recovery costs, legal fees, regulatory expenses and business interruption losses. Clear communication throughout the process helps ensure settlements are handled efficiently, allowing businesses to move forward with confidence once normal operations have been restored.
Real Stories, Real Solutions: Cyber Insurance in Action
At McClarrons, we understand that every business faces different cyber risks. Cyber insurance is designed to provide not just financial protection but peace of mind when the unexpected happens. These case studies showcase how cyber insurance has supported businesses like yours, helping them manage, resolve and recover from cyber incidents.
Explore real examples of how cyber insurance has made a difference by clicking the images on the right.
Nursing home
Haulage Firm
School Fees Fiasco
A word from McClarrons' Managing Director
What our clients say
Contact our team
You can start your enquiry by filling in the contact form and one of the team will be in touch.
Alternatively, you can contact us on 01653 609151.
Cyber Insurance FAQs
Does Cyber insurance cover ransom payments?
Ransom payments are generally referred to as Extortion Costs; some cyber insurance policies will reimburse ransom payments where legally permitted, as well as associated costs such as specialist negotiators and security consultants. However, not all include this cover as standard, so it is important to discuss your exposure and requirements with your insurance broker.
Does Cyber insurance cover losses to my business following an attack?
Yes, cyber insurance can include Business Interruption cover, protecting income and increased costs of working following a cyber incident. The length of cover, known as the indemnity period, varies between policies. This is an important consideration, as disruption can continue long after systems are restored.
How likely is it that my business will suffer a cyber attack?
Did you know, a business is more likely to fall victim to a cyber attack than their building burning down? This may be surprising considering businesses rarely question purchasing cover for fire but currently, many do not purchase cyber insurance. It has also been noted that in 2025, 43% of UK businesses reported experiencing a cyber-attack, equating to approximately 612,000 businesses.
Recent data highlights both the scale of the risk and growing awareness among smaller businesses. Encouragingly, uptake of cyber insurance has increased, with 62% of small businesses holding cover in 2025, compared to 49% the previous year. Despite this progress, cyber risk should not be considered unlikely or low impact. Without appropriate protection, the financial, operational, and reputational consequences of an attack can be significant.
Are there any insurer requirements to obtain Cyber insurance?
Some insurers require businesses to remain compliant with certain regulations regarding GDPR and processing, as well as expecting them to have adequate cyber security in place (including controls such as a firewall and data back-ups). Requirements may vary depending on your industry, the data you handle and your business’s reliance on technology. Your broker can help you understand and meet insurer expectations.
How do I know what my business's cyber security risk is?
One useful tool that looks specifically at the risk of Ransomware is CFC Underwriting’s Ransomware calculator, which you can try here.
More generally, this will depend on the types of data you hold, the cyber security you have in place, any training provided to employees and the potential impact on your business if systems went down or were destroyed, or data was lost or infiltrated; in addition, there’s the potential reputational damage that could come from suffering an attack, which should also be considered.
How much does Cyber insurance cost?
Like all insurance, the premium of a policy depends on many factors, including a business’s exposure and vulnerability to the risk. At McClarrons, we cannot stress enough the importance of considering this cover as the damage an attack can do is often significantly more than the cost of the premium, making it incredibly valuable. We would recommend discussing your risks with a broker, and the potential covers you may be interested in, to obtain a premium estimate.Â
Is Cyber insurance expensive?
Cyber insurance is sometimes thought to be expensive. However, this type of insurance looks to cover scenarios that are, by their nature, extremely costly. Due to the severity of attacks, especially ransomware, costs soon escalate; that’s why policies often provide cover for expert support from forensic investigators, negotiators, IT specialists, lawyers and more. Therefore, whilst the premium of a policy can be seen as expensive, the value it provides can be invaluable.
It is worth noting that premiums can sometimes be reduced if you have suitable, quality risk management in place.