The Link Between Cybersecurity Best Practices and Lower Insurance Premiums
Cyber threats are real. They hit businesses of all sizes. Hackers don’t care if you're a tech startup or a plumbing company. If your systems are weak, they’ll find a way in.
That’s where cybersecurity comes in. It protects your data, your money, and your reputation. But here’s something many business owners don’t know:
Good cybersecurity can also lower your insurance costs.
What Cyber Liability Insurance Covers
Cyber Liability Insurance helps your business recover after an attack or data breach. Most policies cover:
- Data loss or theft
- Ransomware
- Business interruption
- Lawsuits from customers or partners
- Costs to notify people affected
But insurance companies don’t hand out coverage blindly. They look at how well you protect your systems. The better your cybersecurity, the less risky you look to them.
How Insurers Assess Your Risk
When you apply for cyber insurance, the insurer checks your security setup. They may ask:
- Do you use multi-factor authentication (MFA)?
- Do you train employees on phishing scams?
- Do you back up your data regularly?
- Is your software updated?
- Do you have endpoint protection?
If your answers are solid, you look like a safer bet. Safe businesses get better premiums.
Why Good Cybersecurity Lowers Premiums
Here’s the simple truth:
Lower risk = lower cost.
Think of it like car insurance. If you’ve got a clean driving record, you pay less. If you’ve had three accidents, you pay more.
The same goes for cyber liability insurance.
A business with weak passwords and no employee training will likely file a claim. That makes them expensive to insure. A business with solid security? They’re less likely to have an incident, so their premiums are lower.
What Cybersecurity Insurance Carriers Are Looking For in Your Business
Most insurance companies follow the same checklist. If you want lower premiums, here’s what they want to see:
- Multi-Factor Authentication (MFA)
MFA adds a second step to logins. Even if someone steals your password, they still need a code or app to get in. Most insurers now require this.
- Regular Data Backups
If ransomware locks your files, a backup means you can recover without paying. Make sure backups are automatic, off-site, and tested.
- Employee Cyber Training
Employees are your biggest risk. One bad click can lead to disaster. Ongoing training lowers that risk. Some carriers even offer discounts for using approved training tools.
- Endpoint Protection
Laptops, phones, and desktops are all entry points. Antivirus alone isn’t enough. Insurers want to see advanced endpoint detection and response (EDR) systems in place.
- Email Filtering and Phishing Protection
Phishing is still the #1 way hackers get in. Filters catch dangerous emails before they hit inboxes.
- Patch Management
Unpatched software is an easy target. Keep systems updated—especially firewalls, operating systems, and web apps.
- Incident Response Plan
If a breach happens, do you know what to do? Insurers want to see a documented response plan. That shows you’re ready and can limit the damage.
The Business Case for Better Cyber Hygiene
Even without insurance in the picture, good cybersecurity is worth it. One breach can cost tens or hundreds of thousands of dollars. For small businesses, it can be a death blow.
But there’s a bonus: put the right practices in place, and your insurance provider may:
- Offer lower premiums
- Increase your coverage limits
- Approve your policy faster
- Provide access to free or discounted tools
It’s not just about defense. It’s a way to improve your bottom line.
What If You Skip These Steps?
Skipping cybersecurity might save money upfront. But here’s what could happen:
- You get denied coverage
- Your premiums skyrocket
- You get hit with a breach and your policy won’t fully pay out
Many carriers now have minimum security standards. Fail to meet them, and you may not qualify at all.
How To Get Started
If you’re not sure where to begin, start small. Here’s a basic checklist:
- Turn on MFA for all logins
- Back up your data to the cloud
- Update your software weekly
- Train your staff quarterly
- Use strong passwords or a password manager
- Talk to your insurance agent
At Spivey Insurance Group, we help businesses do this every day. You don’t need to be a tech expert. You just need a clear plan.
Working With an MSP
(Managed Service Provider)
If IT isn’t your thing, bring in help. An MSP like Solve iT can handle the tech side. They can:
- Assess your current risk
- Set up protection tools
- Monitor your systems
- Help document your policies
Many insurance carriers are now partnering with MSPs. Some even require it.
Working with a trusted MSP and an insurance agent at the same time? That’s a smart combo.
Final Thought
Cybersecurity isn’t just for big companies. It matters to every business that uses email, stores customer data, or takes payments online.
You don’t have to be perfect. But every step you take makes a difference.
And here’s the bottom line: Better cybersecurity can mean lower insurance premiums.
That’s real savings. And it’s one less thing to worry about.
Have questions about your business coverage or what cybersecurity steps your insurer wants to see?
Reach out to Spivey Insurance Group. We’re here to help you protect what you’ve built.
Sandra Spivey
Spivey Insurance Group