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Updated May 14, 2026 · B2B Insurance · Educational use only ·

Cyber Insurance Calculator

Is cyber insurance worth it?

Calculate cyber insurance expected value against breach risk. Enter premium and breach probability to compare deductible impact.

What this tool does

This calculator models the financial relationship between cyber insurance costs and potential breach exposure. It estimates expected payout by multiplying your breach probability by your average breach cost, then compares this against your annual premium to show whether the coverage generates positive expected value. The result represents a simplified snapshot of the economics: does the probability-weighted cost of a breach exceed what you'd pay in premiums? The calculation assumes breach costs are capped at your policy limit and does not account for indirect costs (downtime, reputation, legal fees beyond direct remediation), tax treatment, claims denial risk, or how breach frequency and severity might evolve. The net value output illustrates the tradeoff on paper only—actual outcomes depend on whether breaches occur and how claims are assessed. Use this to frame one dimension of a cyber insurance decision alongside operational resilience and risk tolerance.

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Formula Used
Probability
Coverage
Premium

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Disclaimer

Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.

Cyber insurance premiums for small businesses run 500-5,000 annually depending on revenue and data handled. Typical breach costs 5,000-500,000. This calculator shows expected value of insurance given breach probability.

2,000 premium with 5% annual breach probability × 100,000 avg cost: expected payout 5,000, net expected value 3,000. Strong positive for businesses that handle customer data.

Cyber insurance often requires security controls (MFA, encryption, backups) for coverage. The premium reflects your security posture - poor controls mean high premium or denied coverage.

Quick example

With annual premium of 2,000 and breach probability of 5% (plus average breach cost of 100,000 and policy coverage of 80,000), the result is 2,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Annual Premium, Breach Probability %, Average Breach Cost, and Policy Coverage. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

What's happening under the hood

Expected payout = probability × coverage. Net value = expected payout - premium. Coverage capped at breach cost. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.

Example Scenario

££2,000 vs 5% × ££100,000 breach = 2,000.00.

Inputs

Annual Premium:£2,000
Breach Probability %:5
Average Breach Cost:£100,000
Policy Coverage:£80,000
Expected Result2,000.00

This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.

Sources & Methodology

Methodology

Expected payout = probability × coverage. Net value = expected payout - premium. Coverage capped at breach cost.

Frequently Asked Questions

Is cyber insurance always worthwhile?
For businesses handling customer data, usually yes. Service businesses without customer records may skip. Check policy exclusions - many don't cover nation-state actors, social engineering, or acts of war.
What breach probability should I enter if I don't have internal data?
Industry benchmarks are a reasonable starting point: IBM and Verizon publish annual breach likelihood estimates by company size and sector, typically ranging from 15% to 30% for small-to-mid-sized businesses over a 12-month window. Using a range of values rather than a single figure helps surface how sensitive the net value calculation is to that assumption. The output shifts substantially with probability, so treating it as a variable rather than a fixed input reflects the real uncertainty involved.
Why does the calculator cap breach cost at the policy limit?
The formula models expected insurance payout, not total breach exposure, so costs beyond your policy limit represent uninsured losses that the premium comparison doesn't capture. A breach costing twice your coverage limit means the insurer pays only up to that limit, leaving the remainder as out-of-pocket liability. This is intentional: it highlights the gap between raw breach exposure and what the policy actually transfers, which is a core reason to stress-test coverage limits against realistic loss estimates for your business.
What costs does this calculator leave out?
The model excludes indirect losses such as operational downtime, customer churn, reputational damage, regulatory fines, and legal fees beyond direct remediation costs, all of which can exceed the direct breach cost in major incidents. It also doesn't factor in claims denial risk, deductibles, sublimits on specific coverage categories, or the possibility that breach frequency increases after a first incident. These omissions mean the net value figure understates true financial exposure and should be read as a floor-level economic estimate rather than a comprehensive risk assessment.

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