Key Takeaways:
- Insurers know they must have insurance objections answers prepared to convince policyholders of coverage benefits.
- Basic questions like “Why do I need cyber insurance?” can leave personal and commercial lines without sufficient coverage.
- Explaining what cyber insurance does not cover — and why — can reset expectations to make policyholders open to coverage.
With cybercriminals adopting advanced technologies like generative artificial intelligence (GenAI) and automation to boost the frequency and effectiveness of their attacks, individuals and businesses face an intense, aggressive threat landscape. Approximately half (48%) of consumers reported being targeted by some kind of social engineering attack — while nearly three-quarters of organizations reported rising cyber risks.
While public awareness of these dangers and the value of data at home and at work has never been greater, insurers know policyholders remain reticent to purchasing cyber insurance. To counter cyber insurance objections, answers given by insurance agents must be thorough, prepared and practiced.
To help insurers best position themselves, let’s examine some common objections.
Tips for overcoming six common cyber insurance objections
Whether they realize it or not, the majority of your clients — both personal and commercial line policyholders — need cyber insurance. Given the potential financial, legal and reputational damage a cyber attack can have, the safety net provided by cyber insurance can ease the data recovery process, including covering legal fees and notification expenses companies will likely face.
Here are six common objections both types of policyholders cite to avoid buying cyber insurance.
1. Why do I need cyber insurance? No one would target me.
Individuals and many small business owners believe cybercriminals have no interest in attacking them because they’re just one person or their company is too small to be of value. Yet, advances in automation mean it’s as easy for a criminal to attack millions of potential victims as it is to concentrate on breaching one big company.
The reality is cybercriminals now prefer to focus on smaller targets because they don’t have the same expertise and resources to defend their systems as large companies. By taking the path of least resistance, they can steal data from hundreds of thousands of small targets for less effort than it takes to target one well-defended corporation. That’s why nearly half (46%) of all attacks now target businesses with fewer than 1,000 employees.
2. Cyber insurance rates are too high
Another common objection is what cyber insurance costs. But while buying coverage may initially seem expensive, it pales in comparison to the potential financial loss caused by a cyber attack.
IBM reported the average cost of a data breach for companies with fewer than 500 employees was $3.3 million in 2023. Those losses include data recovery costs, business interruption caused by unexpected downtime, reputational damage and legal fees. Meanwhile, 44% of consumers lost more than $1,000 in 2024 (with 12% losing $10,000 or more) as the result of identity crimes caused by compromised personal information.
The cost of cyber insurance should be viewed as an investment in the policyholder’s long-term stability and security — giving them the ability to successfully recover if the worst happens.
3. We already have cyber insurance coverage
Some policyholders may have limited cyber coverage through commercial or homeowners policies, but these typically only cover a fraction of the potential risk. Liability riders might cover third-party costs, but that leaves personal line customers to handle data recovery and identity restoration costs, while commercial policyholders must account for business interruption. Operational downtime, lost revenue, reputational damage and potential legal or regulatory penalties remain.
Explaining these gaps in coverage, the impact they can have, and how standalone cyber policies are an affordable, effective way to address them can educate policyholders on how they can strengthen their cyber protection.
4. Cyber insurance does not cover enough
Like any insurance policy, cyber insurance coverage comes with exclusions. If policyholders believe it covers every possible cyber-related incident, they’ll have unrealistic expectations when they file a claim, be disappointed, and likely advise their friends and colleagues against buying cyber coverage.
Establishing what cyber insurance does and does not cover sets realistic expectations — and discussing that reality when the objection is raised can help show the policyholder the advice they’ve gotten may not be based on all the facts. Explaining what exclusions exist and comparing them to all covered items can help policyholders make better-informed decisions about protecting their digital assets and identities.
5. I’ve already invested in great cybersecurity
While the steps policyholders have taken to ensure their cybersecurity should be commended, it’s important they understand no cyber defense is perfect. Whether an individual has installed a quality anti-malware solution or a business has outsourced its IT, cybercriminals are constantly discovering new tactics and vulnerabilities they can use to get into systems.
Cyber insurance is designed to complement these measures, providing financial support if threats do get through.
For businesses, it’s also important to note outsourcing IT does not eliminate risk. Some third-party vendors limit their liability in the event of a cyber event, which leaves the client business on the hook for additional costs, including breach notification services, regulatory penalties and possible legal settlements. Commercial cyber insurance can be extended to cover third-party breaches to ensure the business is protected — wherever the compromise happens.
6. I don’t have/We don't collect sensitive data
Some policyholders think they don’t need cyber insurance because their data isn’t valuable or sensitive. Some personal line customers may have received so many breach notifications they assume their personal data is already exposed, while a business might think they don’t collect data worth stealing.
In reality, whenever personal details are compromised, it opens the individual to new risks. Similarly, cybercriminals can profit from non-sensitive data. That’s because GenAI requires vast amounts of input data to generate the more sophisticated, convincing attacks for criminals. Any policyholder information criminals can gather can be used for more convincing phishing scams, credential stuffing attacks and account takeovers.
With the right cyber protection services and insurance coverage, policyholders can take proactive steps to reduce the risk following a data breach or cyber attack.
Experienced cyber insurance claims support
While some policyholders might not realize it, cyber insurance is a vital tool in today’s digital world. It enables individuals to safeguard their digital lives and plays a critical role in a company’s risk management strategies.
By listening to policyholders, understanding their concerns and knowledgeably addressing their objections, insurers can help them recognize the value of cyber insurance so they make informed decisions to manage their cyber risk.
Get the cyber protection services and support you need to build a profitable and sustainable cyber insurance program. Learn more at TransUnion® Cyber Protection.
