7 Cyber Insurance Myths That Could Be Leaving Your Business Exposed

As cyber threats continue to rise in frequency and sophistication, more businesses and not for profit organisations are considering cyber insurance as a critical layer of protection. Yet, despite its growing importance, many organisations still misunderstand what cyber insurance is—and isn’t. These misconceptions can leave businesses dangerously exposed, mistakenly believing they are protected when they are not.

Here, we break down some of the most common myths about cyber insurance—and explain why every organisation, regardless of size or industry, should be paying close attention.

1. “Cyber criminals only go after big businesses.”

Yes, high-profile breaches make headlines, but in reality, small and medium-sized organisations are often easier targets for cybercriminals because they may lack robust security defences. In fact, smaller businesses are frequently attacked through phishing, invoice fraud, and compromised emails. Size does not make you safer—every organisation is a potential target.

In fact, the 2025 Cyber security breaches survey has found that nearly half of UK businesses and a majority of SMEs are being targeted: Cyber security breaches survey 2025 - GOV.UK. 43% of businesses and 50% of small firms reported experiencing a cyber breach or attack in the past year, with 67% of medium-sized organisations targeted. This equates to roughly 612,000 businesses!

Cybercriminals are opportunistic. They don’t discriminate based on size—they target the most vulnerable and often use them as route to infiltrating the systems of larger organisations.

For smaller organisations, cyber insurance isn’t just about financial protection. It also provides access to expert IT, legal, and crisis management teams, who can help respond to and recover from incidents quickly—services many small businesses couldn’t otherwise afford.

2. “We have good IT security software, so we’re protected.”

Security software is essential, but no system is 100% fool proof. Misconfigurations and emerging threats can bypass even the best defences. Cyber insurance complements your security measures by providing financial protection when breaches do occur—because sometimes, they still will. 

It is important to remember that cyber incidents are often the result of human error—clicking on a phishing link, misconfiguring software, or losing a device. Even the most secure systems can be breached by increasingly sophisticated cybercriminals.

Cyber insurance acts as a safety net when prevention fails. It helps businesses recover from incidents such as ransomware attacks, data breaches, or financial fraud—events that security tools alone cannot always stop.

3. “We don’t collect or hold sensitive data, so we are not at risk.”

Cyber crime does not solely target data and sensitive data isn’t limited purely to customer credit cards or personal records. Emails, payroll information, business plans and supplier contracts are just some examples of what can be targeted. Even if you don’t hold regulated personal data, attacks such as ransomware and funds transfer fraud that don’t require you to hold personal or sensitive data, can cause significant financial loss and bring operations to a halt.  

Cyber insurance covers these risks, ensuring you have the support and funds to respond effectively—even if personal data isn’t involved.

4. “We already have business insurance, so cyber is covered.”

Many general liability, professional indemnity, or business interruption policies explicitly exclude cyber-related events. Cyber insurance is a specialised product designed to cover losses such as data breaches, ransomware attacks, and digital fraud. Assuming your existing policies provide sufficient cover can be a costly mistake—always check the fine print.

While it’s true that some traditional insurance policies may contain limited cyber elements, they were never designed to cover modern cyber threats.  Even if your existing insurance mentions “data loss” or “computer systems,” it likely won’t include full cyber cover such as ransomware negotiation, or breach response.

A standalone cyber policy fills these gaps and offers comprehensive protection—including incident response, data restoration, business interruption, and regulatory defence. Importantly, it also comes with access to specialist claims handlers who are trained to get your business back up and running quickly.

5. “Our IT provider looks after everything, so we don’t need cyber insurance.”

While IT providers play a vital role in maintaining your systems, they are not responsible for covering the financial fallout of a cyber incident. If your organisation is hit with a ransomware attack, data breach, or email compromise, the costs—legal fees, recovery efforts, reputational damage, and more—fall on you. Cyber insurance helps cover those financial impacts, not your IT provider.

If a third-party system fails or is compromised, your business is still accountable for notifying affected customers and handling regulatory consequences, all whilst also having to deal with potential inabilities to continue operating and trading.

What’s more, many third-party providers limit their liability in their contracts. If a breach or outage causes you financial loss, you could be left footing the bill. Fortunately, most cyber insurance policies extend coverage to include third-party IT providers, offering protection from business interruption and other downstream effects of their failures.

6. “Cyber insurance is going to cost too much for our business and is hard to access.”

Cyber insurance is typically much more affordable and easier to access than first thought and certainly more affordable than the potential cost of an incident. The average cyber attack on a small or mid-sized business can cost tens—or even hundreds—of thousands of pounds. Premiums are usually a fraction of that and can be tailored to your risk profile. Not having insurance could cost far more in the long run.

Today’s cyber insurance policies also come with proactive support services: around-the-clock monitoring, threat intelligence and even access to in house incident response and cyber security consultants 24/7/365. These features help reduce the likelihood and severity of incidents—making cyber insurance an investment, not a cost. The result of a recent CFC Study revealed that the average monthly cost to an SME to outsource all these services amounted to £4,962 equating to an annual spend of £59,566. (https://www.cfc.com/en-gb/knowledge/news/2024/07/proactive-cyber-insurance-can-save-smes-thousands-in-outsourced-security-costs/)

7. “If we have cyber insurance, we don’t need to worry about cyber security.”

This misconception can be very dangerous. Cyber insurance and cyber security go hand in hand. Insurance is not a substitute for proper defences—it’s there to help when those defences are breached.

In fact, many insurers now require policyholders to meet certain security standards (like multi-factor authentication or regular staff training) to qualify for coverage.

Cyber insurance isn’t about avoiding risk—it’s about managing it smartly, ensuring that if the worst happens, your business can recover quickly and with minimal disruption.

Conclusion: Understanding Your True Risk

The cyber landscape is constantly evolving. No organisation—regardless of size, industry, or IT setup—is immune to cyber threats. And no single solution, whether it’s security software or outsourced IT support, can provide full protection.

Cyber insurance is not a luxury—it’s a necessity in today’s digital economy. It offers financial protection, rapid incident response, and access to a network of experts—all critical in helping your business survive and recover from a cyber event.

Don’t let misconceptions stand in the way of protecting your organisation. The cost of inaction could be far greater.

Want to find out if your business has the right cover in place? Get in touch with our specialist team via email on hello@simcoxbrokers.co.uk for your free assessment.