Ransomware Insurance: Everything You Need to Know

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Ransomware insurance is a form of insurance specifically designed to protect businesses from financial losses caused by ransomware attacks. This type of insurance is often part of a broader cyber insurance policy but can also be purchased as a stand-alone product.

Ransomware insurance helps cover the cost of restoring data, any payments to attackers, and other expenses associated with ransomware attacks, such as legal fees and lost profits.

By providing businesses with a financial safety net in the event of a ransomware attack, this type of insurance can help ensure the attack does not cripple enterprises, too. The coverage provided by ransomware insurance typically includes both pre-attack protection, such as business continuity planning, and post-attack remediation, such as restoring stolen or encrypted data.

It’s important to note that even if an organization has ransomware insurance, it still needs to practice good security habits to minimize its risk of becoming the target of a ransomware attack. Strong passwords, regular system updates, keeping backups offsite, monitoring employee activities, and training employees on cybersecurity best practices are all necessary steps toward protecting against ransomware.

Also see: Combatting the Rise of Ransomeware-as-a-Service

How Does Ransomware Insurance Work?

The purpose of ransomware insurance is to reimburse organizations for lost or stolen data, system downtime, and other expenses associated with a ransomware attack. An organization with ransomware insurance can cover associated costs, such as IT costs to restore systems, hiring experts to help mitigate the attack, legal expenses, and even public relations costs.

When purchasing ransomware insurance, it is essential to know the coverage limits and exclusions. It is also important to ensure the policy covers the costs associated with responding to a breach and helping organizations recover their data.

Benefits of Ransomware Insurance

Ransomware attacks are becoming increasingly common, and organizations of all sizes are at risk. Ransomware insurance can help businesses prepare for and respond to such attacks.

Financial protection

Ransomware insurance provides financial protection for businesses in case of a successful ransomware attack since the cost of restoring data and systems is high.

Depending on the policy, an insurer can provide a lump sum payment to help cover the cost of downtime, data recovery, and other expenses associated with the attack. This can be especially helpful for companies that lack the resources to deal with a ransomware attack.

Access to expertise

Ransomware insurance policies usually come with access to specialized expertise. Insurers typically provide access to a team of experts who can guide organizations on how to prevent and respond to a ransomware attack. This can include advice on handling negotiations with a ransomware attacker and limiting the damage caused by the attack.

Peace of mind

The most important benefit of ransomware insurance is the peace of mind it provides. Businesses that purchase a policy can rest assured that they will have financial protection in case of a ransomware attack. This can help reduce the stress associated with the possibility of a successful attack and allow businesses to focus their efforts on preventing a ransomware incident from occurring in the first place.

Legal expense reimbursement

Ransomware insurance can provide legal expense reimbursement to help cover the legal fees associated with a ransomware attack. This can be especially useful for businesses that must report a ransomware attack to law enforcement or regulatory authorities.

Coverage for first- and third-party losses

Ransomware insurance can offer coverage for both first-party losses (i.e., losses suffered by the insured) and third-party losses (i.e., losses suffered by other parties, such as customers). This may include business interruption costs, data and system recovery, forensics and legal assistance, and public relations. Depending on the policy, coverage may be available for damage to reputation, cyber extortion costs, and cyber extortion liability.

Also see: Understanding the Zero Trust Approach to Network Security

Disadvantages of Ransomware Insurance

Although there are many benefits to having ransomware insurance, there are also some drawbacks.

Expensive premiums

Ransomware insurance policies may come with expensive premiums, making them cost-prohibitive for many organizations. With the increase in ransomware attacks and the number of claims relating to ransomware, premiums may continue to rise, making it harder for organizations to afford the coverage. The cybersecurity insurance company pays the most in ransom payments, and they factor in the cost of those payments when setting their premiums.

Limited coverage

Ransomware insurance policies may have limited coverage and may not cover all ransomware attacks. This can leave organizations vulnerable to specific cyber threats their policies do not cover. Additionally, some policies may only cover the ransom payment and not other associated costs such as forensics, investigation, and recovery.

Lack of awareness

Many organizations must know that ransomware insurance coverage is essential to their cybersecurity strategy. While they might know to buy cybersecurity insurance, it may not cover ransomware, which is one of the significant reasons to have coverage in the first place.

Organizations must understand the full scope of ransomware coverage to have the protection they need during an attack. Organizations need to understand the different types of coverage available and the costs associated with each type of policy.

Difficult to obtain

Ransomware insurance can be challenging, as many insurers do not offer it. Additionally, some insurers may require organizations to meet specific strict criteria to be eligible for coverage. This can limit the options available to organizations looking for ransomware insurance coverage. Organizations may need to shop around to find an insurer that offers ransomware coverage that meets their needs.

Risk of negotiating with hackers

When an organization opts for ransomware insurance coverage, they may be put in a situation where they must negotiate with the hackers to release their data. This can be risky, as hackers may take advantage of the situation by demanding more money or refusing to release the data, even after payment. Additionally, there is no guarantee the hackers will release the data after payment is made, leaving the organization in an even more vulnerable position.

Also see: Steps to Building a Zero Trust Network

5 Things to Look for in Ransomware Insurance

When shopping for ransomware insurance, reviewing the coverage carefully to ensure it meets your organization’s specific needs is essential. Here are some key points to consider when reviewing ransomware insurance policies:

  • Coverage for IT Forensics: It is essential to look for coverage that includes IT forensics, which will help you determine how the ransomware attack occurred and how to best respond.
  • Coverage for Business Interruption: Look for coverage that includes business interruption, a critical component of ransomware protection. This will help cover any losses due to downtime or disruption in operations resulting from the attack.
  • Coverage for Legal Expenses: Make sure your coverage includes legal costs, which can be high in the event of a ransomware attack. Legal counsel may be needed to navigate the complexities of a ransomware attack and ensure your business is protected.
  • Coverage for Data Recovery: Look for coverage that includes data recovery since restoring encrypted data is one of the critical components of successfully recovering from a ransomware attack.
  • Coverage for Cyber Extortion: Cyber extortion is a common component of ransomware attacks, and your coverage should include this to help protect you from paying any ransom demands cybercriminals may make.

Key Terminology and Definitions

Deductibles and sub-limits

Deductibles are the amount of money the insured must pay before their insurance policy kicks in, and sub-limits are the maximum coverage for a certain kind of loss or expense.

Extortion threats

Extortion threats are threats from a third party of harm or damage to the insured’s property or information unless a ransom is paid. When shopping for ransomware insurance coverage, ensure the coverage includes the following extortion threats:

  • Electronic: Access, sell, disclose, or misuse enterprise information or digital assets
  • Physical: Modify, damage, or destroy data, software, hardware, or applications
  • Financial: Require the payment of a ransom or service fee

Covered losses

The insurance policy reimburses covered losses in case of a ransomware attack. These losses can include but are not limited to the following:

  • Loss of data or confidential information
  • Reputation or brand damage
  • Financial losses
  • Legal fees
  • Business interruption
  • Extortion payments


Exclusions are losses or expenses not covered by the policy and, therefore, are not eligible for reimbursement. It is essential to identify and understand the policy’s exclusions before agreeing. Some exclusions include:

  • War and terrorism exclusions
  • OFAC (Office of Foreign Assets Control) exclusions
  • Networks, systems, and deficiencies correction costs
  • Failure to follow or maintain cybersecurity best practices

Cyber extortion response services

Cyber extortion response services are services provided by the insurer to help the insured in the event of a ransomware attack. It helps to pay for the cost of responding to a ransomware attack, including forensic analysis, data recovery, and credit monitoring. These services can include:

  • Crisis management
  • Cyber security services
  • Cyber forensic analysis
  • Public relations support
  • Legal advice
  • Negotiation of ransom payments

Business interruption coverage

Business interruption coverage helps to cover the loss of income due to the interruption of normal business operations caused by a ransomware attack. It typically covers lost revenue, extra expenses, and restoring systems and data costs.

Get Ransomware Insurance in 7 Steps

Take the following steps when shopping for ransomware insurance.

1. Identify your risk

The first step in obtaining ransomware insurance is to identify the risks associated with your business. This can include the type of data you store, the size of your network, and the types of threats you may face. Knowing the potential risks in advance can help you determine which type of ransomware insurance is best for you.

2. Research ransomware insurance providers

Various companies provide ransomware insurance policies, so comparing each provider’s coverage, cost, and other details is essential before making a decision. It is also helpful to read reviews from other customers to get an idea of the quality of service each company provides.

3. Contact ransomware insurers

Once you have identified potential providers, contacting them and requesting quotes is next. This can be done via phone, email, or online. Provide as much information as possible about your business, including its size, the nature of its operations, and any existing cybersecurity measures. This will help the insurers determine the type of policy and coverage that best meets your needs.

4. Compare quotes

Once you have received quotes from various providers, comparing them is essential. Take time to review the coverage provided by each policy and the associated costs. Make sure the coverage you purchase is comprehensive and sufficient enough to meet your needs.

5. Read the fine print

Before signing any insurance contract, read all of the contract’s fine print and ensure you understand the terms and conditions. Examine these contractual details to ensure you know of any exclusions or limitations. Pay close attention to any exclusions or limitations that may affect your coverage.

6. Choose a ransomware insurance provider

Once you have compared the quotes and examined the contract, you can select the insurer that best meets your needs. Having chosen a provider, you can then purchase the policy and begin taking steps to protect your business from ransomware threats.

7. Review your policy

It’s important to review your policy regularly to ensure it is up to date and continues to meet your needs. Additionally, it’s essential to stay up to date on any changes in the cybersecurity landscape and adjust your policy accordingly.

3 Top Cybersecurity Insurance Providers

The following are examples of cybersecurity insurance providers. These providers balance quality service and affordability. But be aware there are numerous vendors in this space, so research extensively before selecting a provider.

Hiscox: Best for small business

Hiscox is an international specialist insurer that provides insurance solutions for businesses, professionals, and individuals. It offers a range of products and services, including business, professional liability, cyber, property, and travel insurance. It also provides tailored insurance solutions to meet the unique needs of its customers.

Hiscox cybersecurity insurance covers:

  • Lost business revenue and data recovery costs due to a breach or extortion threat
  • Money lost due to a fraudulent instruction by a third party (known as phishing)
  • Defense against privacy lawsuits and regulatory fines
  • Breach response resources if an attack occurs

Chubb Cyber Insurance: Best for large enterprise

Chubb is an insurance company that provides various insurance products and services, including personal, business, and specialty lines. It is one of the world’s largest insurance companies.

Chubb offers cyber insurance products to help protect businesses from:

  • Financial losses caused by data breaches
  • Cyber extortion, and other cyber threats
  • It offers three business cyber product categories: Cyber Enterprise Risk Management (Cyber ERM), DigiTech Enterprise Risk Management (DigiTech ERM), and Integrity+ by Chubb.

The Hartford: Best for small and large businesses

The Hartford insurance company provides auto, home, business, and life insurance and other financial services. It is one of the largest insurance companies in the United States, specializing in cyber insurance.

It provides a range of coverage to protect businesses:

  • Insurance for cyber threats, such as data breach insurance for small businesses
  • Cyber liability insurance for larger enterprises
  • Cyber risk management services to help enterprises to identify, assess, and manage their cyber risks.

Top Cybersecurity Controls Requirements to Expect From an Insurer

Cybersecurity insurance providers may require enterprises to have the following security measures before they offer coverage:

  • Security Monitoring and Incident Response: Implement security incident and event management systems to monitor for and detect potential security threats and malicious activities.
  • Access Control and Authentication: Establish authentication, authorization, and access control mechanisms to ensure only authorized users can access sensitive information and systems.
  • Data Encryption: Implement data encryption in transit and at rest to protect data from unauthorized access and disclosure.
  • Network Security: Establish firewalls and other network security controls to prevent cyberattacks and data exfiltration.
  • Risk Management: Develop and implement risk management processes and procedures to identify, assess, and mitigate potential risks and vulnerabilities.
  • Employee Training: Implement employee cybersecurity awareness and training programs to ensure employees are aware of the importance of cybersecurity and the potential risks associated with it.
  • Regular System Patching and Vulnerability Scans: Utilize automated vulnerability scanning tools to identify vulnerabilities in systems and applications.
  • Security Policies and Procedures: Establish and maintain comprehensive security policies and procedures to ensure all systems and applications are adequately secured and compliant with security best practices.
  • Identity and Access Management: Implement identity and access management systems to ensure only authorized users can access sensitive information and techniques.
  • Business Continuity and Disaster Recovery: Develop and implement business continuity and disaster recovery plans to ensure critical business functions can continue during a cyberattack or other catastrophic event.
  • Logging and Monitoring/Network Protection: Establish systems and processes to log and monitor user activity, system access, and network traffic to detect suspicious activity or potential threats.

What Affects the Policy Coverage and Price?

In addition to issues like estimated cost of an attack and an organization’s size and cyber security infrastructure, other factors that can affect the coverage and price of a ransomware insurance policy, including:

  • Insurer’s Risk Exposure: The insurer will assess the risk of a ransomware attack occurring by conducting vulnerability scans. The amount of coverage provided will depend on the perceived threat.
  • Geographic Region: The geographic area can influence the coverage and price of a policy, as insurance companies may have different premiums in different areas.
  • Policyholder’s Claims History: The policyholder’s claims history can have an impact, as insurers may be more willing to provide coverage to policyholders with a history of filing fewer claims.
  • Policyholder’s Cybersecurity Posture: The policyholder’s cybersecurity posture, including the strength of their security systems and the measures they have taken to protect their data, will influence the coverage and price of the policy.

The policy price will also depend on the insurer and the coverage limits they offer. Generally, the more comprehensive the coverage, the higher the cost of the policy.

What Happens if You Experience a Ransomware Attack With Insurance?

Suppose you experience a ransomware attack with insurance. In that case, your insurance provider may cover the costs associated with the attack, such as the ransom payment, if required, and any costs associated with restoring or recreating lost or damaged data.

Depending on the terms of your policy, you may be eligible for reimbursement of lost income due to downtime caused by the attack. Additionally, your insurer may provide legal and technical resources to assist with the investigation, remediation, and recovery from the attack.

Your insurer may also provide cyber security consulting services to help you develop a plan to prevent similar attacks in the future. And they may provide training and resources to help you become more aware of potential threats and to help protect your data.

Protect Your Organization With Ransomware Insurance

When ransomware insurance is combined with other measures such as user education and awareness, data backups, and endpoint security software, it can provide an additional layer of protection in the event of a ransomware attack. However, companies should still take proactive steps to reduce the risk of a ransomware infection.

This includes regularly patching vulnerable software and hardware, deploying endpoint security solutions, monitoring suspicious activity, and training users to identify malicious emails and websites. By taking these proactive steps, companies can better prepare themselves for potential attacks and reduce their need for costly insurance coverage.

While ransomware insurance cannot guarantee complete protection against a cyberattack, it can give organizations peace of mind knowing they have taken steps to protect themselves financially should something go wrong.

Aminu Abdullahi
Aminu Abdullahi
Aminu Abdullahi is an experienced B2B technology and finance writer and award-winning public speaker. He is the co-author of the e-book, The Ultimate Creativity Playbook, and has written for various publications, including eWEEK, Enterprise Networking Planet, Tech Republic, eSecurity Planet, CIO Insight, Enterprise Storage Forum, IT Business Edge, Webopedia, Software Pundit, and Geekflare.

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