Cyber Insurance – what businesses need to know
Cyber insurance has become an increasingly important topic in today’s risk landscape, especially following a string of high-profile cyber attacks on major businesses like M&S, Co-op, Adidas, and North Face.
But it’s not just large national or global companies that are at risk. Small and medium-sized businesses are frequently targeted by cyber criminals too. In fact, according to the UK government’s latest Cyber Security Breaches Survey 2025, 43% of UK businesses reported experiencing some form of cyber security breach or attack in the past 12 months. That’s an estimated 612,000 businesses affected in just one year.
With figures like these, it’s no surprise that more and more UK businesses are turning to cyber insurance for protection, support and peace of mind.
To help you understand what cyber insurance is, why it matters and what it typically covers, we’ve put together this detailed guide. If you have any questions or would like to discuss cyber cover for your business, please don’t hesitate to contact our team.
What does cyber insurance typically cover?
Cyber insurance is designed to protect businesses from the financial impact of cyber incidents, such as data breaches, hacking and other types of cyber-attacks. It can cover both direct financial losses (known as first-party losses) and the costs of handling claims made against you (third-party losses) following a cyber event.
A cyber event could be anything from unauthorised access to your IT systems, a targeted cyber-attack, or a breach of personal data. For many businesses, the biggest financial exposures are first-party losses – things like stolen funds, stolen data or damage to digital systems.
Cyber insurance can also provide valuable support for managing cyber incidents, offering expert guidance and resources both before and after an attack.
Below are the key areas that cyber insurance typically covers:
Pre-incident support
Many cyber policies can include tools to help businesses strengthen their cyber defences before anything goes wrong. This can include:
- Access to cyber security specialists and threat monitoring services
- IT system health checks and vulnerability assessments
- Cyber security training for staff
- Password management and best practice guidance
Security and privacy breach costs
This is often one of the most important parts of cyber insurance, as it can help with the costs of managing a data breach – including:
- Notifying affected customers
- Setting up call centres to handle customer enquiries
- Hiring public relations consultants to manage reputational impact
- Forensic IT investigations to identify the source and extent of the breach
- Legal advice and regulatory support
It can also cover claims made against your business for privacy breaches, including legal defence costs and compensation payments. This cover is particularly vital for any business that stores or processes personal customer data.
Post-incident support
Most cyber insurance policies come with rapid-response support if something goes wrong. This includes:
- 24/7 access to cyber specialists recommended by the insurer
- Expert help in assessing the breach and restoring systems
- Advice on legal, regulatory and customer notification requirements
Having quick access to this level of expertise can make a significant difference in how effectively your business recovers from a cyber-attack.
Cyber extortion
Cyber extortion, including ransomware attacks, is one of the fastest-growing cyber threats. Cyber insurance can cover:
- Ransom payments demanded by cyber criminals
- Costs of hiring specialist negotiators
- Expenses involved in safely transferring funds
It is important to remember that paying a ransom should never be the first step. You should always involve the police and consult your insurer immediately to understand your options and the terms of your cover.
Damage to digital assets
If your digital systems, data or assets are damaged, corrupted or deleted following a cyber-attack, cyber insurance can cover:
- The cost of repairing or replacing websites, databases and other digital assets
- Losses due to the misuse or disruption of IT systems
This cover is especially important for businesses that rely on online platforms, digital tools or automated processes.
Business interruption
If your business operations are disrupted due to a cyber incident, cyber insurance can help recover lost income and additional costs. This might include:
- Loss of earnings during downtime
- Increased costs of working while systems are restored
Business interruption cover can provide essential financial support while you get back to normal operations.
Liability costs
Cyber insurance can also protect your business if someone makes a claim against you for:
- Libel, slander or defamation via your digital content
- Infringement of intellectual property rights linked to your website, emails or social media
This cover is especially useful for businesses with a strong online presence, those creating digital content or those running customer-facing websites.
Cyber insurance policies can vary, but these are some of the most common areas of protection. To find out more about what’s available or to discuss the right level of cover for your business, please get in touch with our team.
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Get in touchCommon cyber insurance exclusions: What isn’t covered?
As with any insurance policy, it’s just as important to understand what isn’t covered as it is to know what is. Cyber insurance policies can often come with specific exclusions, as well as conditions and definitions that need to be carefully reviewed.
Some exclusions are common across many types of insurance – such as war and terrorism – but there are also exclusions that are unique to cyber cover. As ever, cover can vary widely between insurers, but we have listed some of the most typical exclusions to be aware of below. Yutree can advise on reducing these exclusions to suit your business:
Jurisdiction and territorial limits
Cyber policies will often specify the geographical areas they cover. While most UK policies include protection for territories within the EU and other parts of the world, it’s not uncommon for North America to be excluded due to the higher legal risks and claims costs associated with that region.
Claims brought by related parties
Cyber insurance is designed to protect your business against third-party claims, such as those from customers whose data has been compromised.
However, most policies exclude claims brought by businesses that are linked to you, such as subsidiaries.
Some policies also limit claims from your own employees or contractors. For example, if an employee’s personal data is exposed and they make a claim, this may not be covered.
Physical injury and property damage
Cyber insurance focuses on digital losses and is not intended to cover physical injury or damage to property caused by a cyber event. Incidents involving bodily injury, illness or damage to physical assets would usually fall under other insurance policies, such as property or liability insurance.
Critical national infrastructure failures
Losses resulting from the failure or outage of critical infrastructure – such as electricity, gas, water, satellite systems or telecoms networks – are usually excluded from cyber policies. These risks are considered too large and unpredictable for individual insurers to cover.
Cyber warfare
Cyber-attacks that are linked to acts of cyber warfare, or those suspected to involve government-backed hackers, are commonly excluded. These large-scale attacks are often treated in a similar way to war and terrorism risks, which are typically excluded across most types of insurance.
Fines, penalties and sanctions
Some cyber insurances do not cover any fines, penalties or sanctions that your business is legally required to pay – whether they are criminal, civil or regulatory. This is a standard exclusion across some policies however, cover is available from certain insurers via Yutree.
Every cyber insurance policy is different. Exclusions, definitions and policy conditions can vary between insurers, so it’s important to check the detail carefully. If you’re unsure about what’s included or excluded from your cover, or what cover your business needs, get in touch with our team now.
At Yutree, we provide industry leading solutions for businesses – from the smallest to the largest firms.Get in touch today to learn more about how Yutree can help your business:
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