When small business owners think about cyberattacks, they picture major corporations like Target or Equifax making headlines. However, in reality, small businesses are increasingly targeted by cybercrime and often experience devastating financial consequences. Even among those businesses that are aware of today’s cyber risks, 64% believe their operation is too small to be an attractive target for cybercriminals, according to a 2025 study by Coalition.1
According to the Coalition study, 43% of cyberattacks are directed at small businesses. Why? Smaller organizations typically have fewer security resources, weaker or outdated infrastructure, and limited dedicated IT staff. Hackers are aware of these vulnerabilities and exploit them. The result can be devastating, from system shutdowns to stolen data, reputational damage, customer distrust, and six-figure losses.
Many small businesses often mistakenly assume they’re not at risk because they don’t store credit card or protected health information (PHI). But even something as simple as a customer database with names, email addresses, and phone numbers can be a gold mine for cybercriminals. In some cases, it’s not even client data that’s stolen but employee information, such as Social Security numbers and tax records. For example, one business had its employee data stolen and used to file fraudulent tax returns, with refunds claimed before the employees were even aware of the issue.
A cyberattack can also disrupt a business’s operations for days or even weeks. For small businesses that rely on daily transactions or customer-facing services, the financial toll of downtime can be crippling without the right policy in place.
Ransomware is also increasing among smaller organizations, which are being deliberately targeted due to their lack of robust security infrastructure and IT staff. In fact, 60% of small businesses that experience a ransomware attack close within six months due to the combined impact of recovery costs, reputational damage, and lost business.
Not all cyber incidents come from outside. Internal threats, whether from malicious insiders or simple employee mistakes, can also result in serious breaches. Clicking a phishing link or mishandling data can open the door to attackers.
To protect against the devastating cost of a cyberattack, small businesses should incorporate cyber insurance as part of their comprehensive risk management portfolio. Even a modest breach can be costly. One small business cyber claim involving just 11,000 personal records resulted in a $1.1 million payout, primarily due to regulatory fines and class action settlements.
Cyber insurance helps businesses recover from a range of threats, including data breaches, ransomware attacks, and system shutdowns. Coverage typically includes:
It’s important to note when you’re seeking insurance coverage, in addition to looking at a business’s risk, insurance carriers also want to know what risk-mitigation measures are in place. To qualify for cyber coverage, many insurers now ask whether a business:
These safeguards are just a few critical measures that help prevent attacks and help reduce the cost of impact as well as demonstrating to underwriters that the business makes cyber security a priority.
Every business, regardless of its size or industry, is vulnerable to a cyberattack. Today’s threats are scalable, sophisticated, and aimed at the underprepared. With the right insurance and risk controls in place, small businesses can face those threats with confidence.
Cyber insurance provides critical financial protection in the event of an unexpected incident and signals to clients, vendors, and regulators that your business takes security seriously.
Bryce Clapp, CBIA