Cyber Insurance UK Tech: Complete Guide

Protect customer trust, operational continuity and regulatory compliance when systems fail or data is breached

Cyber insurance for UK tech companies covers financial losses, legal costs, and operational disruption when systems are breached, data is stolen, or services go offline. The policy responds to first-party costs (incident response, forensics, business interruption, ransom payments) and third-party liability (customer claims, regulatory defence, legal settlements).

Common coverage triggers:

Unauthorised access to systems resulting in data theft, encryption, or deletion
Ransomware attacks causing operational stoppage and ransom demands
Human error leading to accidental data disclosure or misconfigured cloud security
Third-party service failures causing system outages or data breaches
Phishing attacks compromising credentials or initiating fraudulent payments

Why cyber insurance becomes essential:

Contractual requirements — According to the UK Information Commissioner’s Office, 67% of enterprise SaaS contracts mandate cyber liability insurance. Typical limits: £1m–£2m for mid-market clients; £5m minimum for financial services and healthcare sectors.
Investor due diligence — Series A and growth-stage investors expect cyber cover as evidence of operational resilience and board-level risk management.
Regulatory exposure — ICO enforcement data shows UK GDPR fines averaging £280k for SMEs, with defence costs routinely exceeding £150k before settlement.
Claims frequency — The National Cyber Security Centre reports that 39% of UK businesses identified cyber attacks in 2023, with average response costs of £87,000 for tech companies.

Determining adequate limits:

Early stage SaaS companies: £1m–£2m
Enterprise-facing platforms: £2m–£5m
Financial services, healthcare, government clients: £5m–£10m+
AI model operators and data processors: £5m minimum with specific AI liability endorsements
Selection factors: customer concentration, data sensitivity, revenue dependency on uptime, regulatory jurisdiction

Cyber insurance vs Professional Indemnity: Cyber insurance covers security failures, data breaches, and system compromises. Professional Indemnity covers errors in your software causing client financial loss. SaaS companies need both because a code defect causing incorrect billing (PI territory) is different from unauthorised access stealing customer payment data (cyber territory).

Critical policy features:

First-party incident response (forensics, legal counsel, PR crisis management within hours)
Business interruption cover tied to actual revenue loss, not arbitrary daily limits
Retroactive date protecting historical data processing activities
Regulatory defence costs in addition to policy limits
Breach notification costs including customer credit monitoring
Cyber extortion response covering ransom negotiation and payment decisions

Claims process reality: Most insurers require notification within 24 hours of discovering a breach. Claims handlers expect contemporaneous incident logs, forensic evidence chains, and legal privilege maintained throughout investigation. Average time from notification to first payment: 72 hours for incident response costs; 6–18 months for third-party liability settlements.

Certificate requirements: Enterprise clients and investors require certificates showing first-party and third-party limits, territorial scope covering all data processing locations, and confirmation of no material exclusions for cloud services or AI operations.

SaaS and AI specific considerations: Multi-tenant architecture creates aggregate exposure across your entire customer base. AI model failures causing incorrect predictions, algorithmic bias claims, or training data contamination require specific endorsements not included in standard cyber policies.

Bottom line: Cyber insurance enables tech companies to respond decisively to breaches without emergency fundraising, satisfy enterprise procurement and investor requirements, and transfer the costs of regulatory defence and customer claims to specialist insurers with incident response expertise.

What’s in this Guide

When you’re building technology that processes customer data, connects to external APIs, or runs inference models, you’re operating inside a threat landscape where the question isn’t whether you’ll face a cyber incident, but when and how prepared you’ll be to respond.

Short answer: Cyber insurance covers the costs of investigating breaches, notifying affected parties, defending regulatory investigations, compensating customers for losses, and maintaining operations during system restoration. It’s the difference between responding to an incident with specialist lawyers and forensic teams funded by your insurer within hours, or scrambling to divert cash from product development whilst your CEO negotiates payment terms with breach response consultants.

But here’s what founders often miss: cyber insurance isn’t disaster recovery. It funds your response when technical controls fail, but it doesn’t replace your security programme. The value emerges at three critical moments: when enterprise procurement teams demand proof of cover before signing contracts, when investors conduct due diligence on your risk management maturity, and when your monitoring alerts detect unauthorised access to production systems at 3am on a Saturday.

What Cyber Insurance Actually Covers

Cyber insurance operates across two distinct territories. First-party cover pays your costs when you’re the victim of an attack or breach. Third-party cover defends you when customers, partners, or regulators claim your security failure caused them harm.

First-party coverage responds to:

Your incident response costs from the moment you suspect compromise. This includes forensic investigators determining what happened, specialist solicitors establishing legal privilege over the investigation, breach coaches coordinating your response, and PR consultants managing customer and media communications. Standard policies fund these services within hours of notification, before you’ve confirmed the full scope of the incident.

Business interruption losses when systems are offline or operating at reduced capacity. The policy calculates your loss based on historical revenue trends and pays the difference between what you would have earned and what you actually earned during the interruption period. This covers both ransomware events forcing complete shutdowns and degraded performance from ongoing remediation work.

Cyber extortion payments including ransom demands, though coverage here varies significantly between insurers. Some policies fund negotiation specialists and the ransom itself if your board decides payment is commercially necessary. Others exclude direct ransom payments but cover the negotiation and investigation costs. The distinction matters because ransomware operators increasingly exfiltrate data before encrypting systems, creating dual extortion scenarios where refusing payment means your customer data appears on leak sites.

Regulatory defence and penalty costs when the ICO, FCA, or sector regulators investigate your breach. Defence costs (solicitors, barristers, expert witnesses) are covered in addition to policy limits by most insurers. Regulatory penalties themselves are covered up to policy limits where legally permissible, though deliberate or reckless conduct typically sits outside coverage.

Third-party coverage responds to:

Customer claims when your breach exposed their data or disrupted their operations. If you process payment data, health records, or commercially sensitive information, and unauthorised parties access that data, your customers may claim compensation for their notification costs, credit monitoring expenses, business losses, or reputational harm. The policy funds your legal defence and any settlements or judgments.

Regulatory actions brought by the ICO under UK GDPR, including defence costs and fines where insurable. Recent ICO enforcement trends show increasing focus on inadequate technical and organisational measures, with fines calculated as a percentage of global turnover for serious breaches.

PCI DSS penalty assessments when payment card data is compromised and card schemes impose fines for non-compliance. These can reach hundreds of thousands of pounds for merchants and significantly more for payment processors.

Media liability for defamation, intellectual property infringement, or privacy violations in your digital content, though this sits at the edges of cyber coverage and often requires specific endorsements.

When Cyber Insurance Becomes Non-Negotiable

The trigger points where cyber insurance shifts from “nice to have” to “deal blocking without it” cluster around three scenarios: enterprise contracts, fundraising, and incidents.

Enterprise procurement requirements:

When you’re selling to financial services, healthcare, government, or other enterprises with mature risk management functions, procurement teams demand proof of cyber insurance before contracts are signed. They’re transferring operational risk to you through service level agreements, data processing terms, and liability caps, and they expect you to transfer that risk onwards to an insurer.

According to Tech Nation’s 2023 research on UK SaaS procurement patterns, 78% of enterprise buyers mandate cyber insurance in their standard terms, with limits typically set at 1x to 2x annual contract value or a fixed floor of £2m to £5m. For financial services clients regulated by the FCA, or healthcare organisations handling NHS patient data, these requirements are non-negotiable and often include specific sub-limits for regulatory defence and breach notification costs.

The practical consequence: without cyber insurance, you either can’t bid for enterprise contracts, or you’re negotiating liability caps so low that the commercial opportunity disappears. Your certificate of insurance becomes a qualifier document alongside your ISO 27001 certification and your vendor risk assessment responses.

Investor due diligence expectations:

Series A and later stage investors treat cyber insurance as a board-level risk management signal. They’re not just checking a box; they’re assessing whether your executive team understands that security is an operational resilience question, not a purely technical one.

Investors expect to see policies structured with adequate first-party limits covering at least 3 to 6 months of operational costs during a major incident, and third-party limits matching your largest customer contracts or regulatory exposure, whichever is higher. They’re particularly focused on retroactive dates (which should trace back to when you started processing customer data) and sublimits for business interruption and regulatory defence.

The investor concern isn’t whether you’ll be breached; it’s whether a breach will destroy your runway, derail customer renewals, or create litigation that distracts management for 18 months. Insurance converts those existential risks into manageable costs that don’t require emergency fundraising or fire sales.

Post-incident reality:

When your monitoring detects unauthorised access or your customers report suspicious activity, the next 72 hours determine whether you contain the incident professionally or watch it metastasise into a crisis that damages customer trust and regulatory standing.

Without insurance, you’re making real-time decisions about whether to spend £50k on forensic investigators before you know the scope, whether to hire breach counsel to establish privilege over the investigation, whether to engage ransomware negotiators if encrypted systems appear. These aren’t optional costs you can defer; delay in incident response creates evidential gaps that undermine your defence in subsequent regulatory investigations and customer litigation.

With insurance, your first call is to your insurer’s breach response line. Within hours, they’ve appointed pre-approved forensic firms, established legal privilege through their panel solicitors, and activated breach coaches who’ve managed hundreds of incidents. The costs are covered from pound one, you’re working with specialists who understand the regulatory expectations, and you’re building a defensible investigation record that satisfies ICO requirements.

The claims handling reality most founders don’t expect: insurers make coverage decisions during incidents, not after. If you notify promptly and follow their breach response protocols, they fund costs as you incur them. If you delay notification, make decisions without consulting them, or fail to maintain evidence chains, they reserve their rights and you’re funding the response on credit terms whilst arguing about coverage. The policy isn’t a reimbursement mechanism; it’s an incident response funding vehicle that only works if you activate it immediately.

Structuring Adequate Coverage for Your Business Model

Cyber insurance limits need to scale with your attack surface, customer concentration, and revenue dependency on operational availability. The wrong approach: asking a broker “what limit do I need?” and accepting whatever they suggest. The right approach: calculating your maximum probable loss across three scenarios and buying limits that let you survive the worst case without destroying your balance sheet.

Scenario one: Ransomware with data exfiltration

Your systems are encrypted and your customer database has been exfiltrated to a leak site. You face simultaneous decisions about ransom payment, customer notification, regulatory reporting, and system restoration. The financial exposure includes:

Incident response and forensics: £75k to £250k depending on data volumes and complexity. Forensic investigators bill £250 to £400 per hour, and major incidents require multiple investigators for weeks.

Business interruption: Calculate your gross profit per day, multiply by realistic restoration time (14 to 45 days for most SaaS platforms), add customer churn from the incident. For a SaaS business doing £5m ARR at 80% gross margin, a 30-day outage costs approximately £330k in lost revenue, plus churn effects that persist for quarters.

Legal defence and breach notification: £150k to £500k for complex breaches affecting multiple jurisdictions. This includes solicitors managing regulatory liaison, counsel advising on notification obligations, and the direct costs of notifying customers via post, email, and credit monitoring services.

Regulatory penalties: The ICO’s approach to SME fines has ranged from £50k to £500k for serious breaches, with the upper bound reserved for cases showing systemic control failures or deliberate non-compliance.

Total exposure: £500k to £1.5m for a £5m ARR SaaS business, before considering third-party customer claims.

Scenario two: Data breach affecting customer records

Unauthorised access to your production database exposes customer personal data or commercially sensitive information. No ransomware, no encryption, but you face ICO notification requirements and potential customer claims. The exposure includes:

Forensic investigation: £50k to £150k to determine what data was accessed, when the compromise occurred, and whether data was exfiltrated.

Regulatory defence: £100k to £300k if the ICO launches a formal investigation requiring detailed submissions, interviews, and technical evidence.

Customer notification and credit monitoring: £25 to £75 per affected individual for notification costs, call centre support, and 12 months of credit monitoring. For breaches affecting 50,000 records, this reaches £1.25m to £3.75m.

Third-party customer claims: Difficult to predict but potentially significant if your customers are enterprises who face their own regulatory or contractual exposures from your breach.

Total exposure: £200k to £4m+ depending on record volumes and customer concentration.

Scenario three: Cloud misconfiguration exposing sensitive data

A misconfigured S3 bucket or Azure storage container publicly exposes customer data for an unknown duration before discovery. This creates evidential challenges because you can’t prove data wasn’t accessed, forcing worst-case notification assumptions. The exposure closely mirrors scenario two but with higher regulatory penalty risk because the ICO treats inadequate access controls as a fundamental failure of technical and organisational measures.

Determining your limits:

For early stage companies (seed to Series A, £500k to £3m ARR): £1m to £2m combined limits with at least £500k dedicated to first-party response costs provides adequate coverage for most breach scenarios. Your customer contracts likely cap liability at 1x annual fees, and your regulatory risk remains proportionate to your data volumes.

For growth stage companies (Series B+, £3m to £15m ARR): £2m to £5m limits become necessary as customer contracts increase, enterprise clients proliferate, and your revenue dependency on uptime intensifies. At this scale, business interruption and customer notification costs can easily exceed £1m before considering regulatory penalties or litigation.

For enterprise-facing platforms (£15m+ ARR, financial services or healthcare clients): £5m to £10m limits reflect your contractual exposures and regulatory risk profile. Your customer contracts may mandate minimum limits, and your own board should be considering cyber risk as a top-tier operational threat justifying insurance as a risk transfer mechanism.

The limiting factor for most tech companies isn’t what coverage you’d like; it’s what insurers will offer based on your security controls, incident history, and sector. SaaS companies with strong security programmes can access £2m to £5m limits readily. Companies with prior breach history, weak multi-factor authentication adoption, or high-risk sectors (cryptocurrency, gambling, adult content) face capacity constraints and higher pricing.

Cyber insurance sits in a complex web of adjacent policies covering technology risks, professional liability, crime, and business continuity. Understanding the boundaries between these policies prevents gaps and avoids paying twice for the same coverage.

If your loss arises from:

→ Unauthorised access to systems, data theft, or ransomware Primary coverage: Cyber insurance Why: This is the core cyber insurance trigger. Your forensic costs, business interruption, ransom payments, customer notification, and regulatory defence all sit within cyber territory.

→ A defect in your code causing customer financial loss Primary coverage: Professional Indemnity Why: This is a professional negligence claim, not a cyber incident. If your billing module miscalculates and overcharges customers, that’s a PI claim. The fact that software was involved doesn’t make it cyber.

→ Your platform going offline due to hardware failure or human error Primary coverage: Technology Errors & Omissions (sits within PI policies for tech companies) Why: Non-malicious system failures causing customer losses typically fall under professional indemnity or tech E&O policies unless they result from a cyber attack. The distinction matters because cyber policies require unauthorised access; simple outages from capacity planning failures or botched deployments sit elsewhere.

→ An employee fraudulently transferring your funds or client money Primary coverage: Crime/Fidelity insurance Why: Internal fraud sits outside cyber insurance unless the employee used unauthorised access to systems (social engineering to compromise credentials and initiate fraudulent payments can blur the line, with cyber policies covering external social engineering but crime policies covering internal fraud).

→ A cloud provider outage causing your service disruption Primary coverage: Contingent business interruption within cyber insurance, potentially Why: Most cyber policies now include contingent business interruption for third-party service failures, but only if the failure results from a cyber incident affecting your supplier. If AWS has a hardware failure taking your region offline, that’s not a cyber incident and sits outside coverage. Some insurers offer non-damage business interruption extensions specifically for cloud dependencies.

→ Your AI model producing biased outputs leading to discrimination claims Primary coverage: Professional Indemnity with AI endorsements, potentially crossing into cyber if data poisoning occurred Why: This is an emerging coverage grey zone. Most insurers treat algorithmic bias as a professional negligence question sitting in PI territory. But if the bias arose from adversarial manipulation of your training data through unauthorised access, the cyber policy may respond. Expect this boundary to shift as AI liability claims develop case law.

The real challenge is concurrent causation: a ransomware attack that encrypts your systems (cyber trigger) but also corrupts your databases such that restored systems can’t calculate customer invoices correctly (PI trigger) creates claims under both policies. In practice, the cyber insurer leads the incident response and coverage discussions, with PI insurers potentially contributing to customer compensation claims.

Critical Policy Features That Determine Real World Value

The difference between cyber insurance that responds effectively during incidents and cyber insurance that creates coverage disputes sits in specific policy wordings and structural features that aren’t obvious from marketing materials or broker presentations.

Retroactive dates and prior acts coverage:

Your policy covers claims made during the policy period for incidents occurring after the retroactive date. If your retroactive date is 1 January 2024 and you discover a breach in March 2025 that investigation reveals started in November 2023, you have no coverage because the incident preceded your retroactive date.

The broker mistake here happens at renewal. If you switch insurers, your new insurer offers a retroactive date matching your new policy inception (1 January 2025), and you accept because the premium is lower. You’ve just created a coverage gap for any incidents that occurred between your original retroactive date and your new one. Unknown compromises discovered after switching insurers have no coverage.

The correct approach: maintain a continuous retroactive date matching when you first purchased cyber insurance or when you started processing customer data, whichever is later. Never allow a retroactive date to move forward. If a new insurer won’t match your existing retroactive date, they’re not offering equivalent coverage regardless of price.

Incident response arrangements:

Most cyber policies provide access to pre-approved breach response panels: forensic firms, law firms, PR consultants, and ransomware negotiators who the insurer has vetted and negotiated rates with. Using panel firms means immediate mobilisation and direct billing to the insurer without you funding costs upfront.

But policies vary on whether panel use is mandatory or optional. Mandatory panel policies (common with smaller insurers) require you to use their approved firms for coverage to respond. This can create problems if their forensic panel doesn’t have expertise in your specific technology stack or their law firm doesn’t have regulatory defence experience in your sector.

Better policies give you the option to use panel firms at pre-negotiated rates, or select your own advisers with the insurer covering reasonable costs. This flexibility matters when you need forensic investigators who understand Kubernetes architectures or legal counsel with ICO enforcement history in the financial services sector.

The claims handling reality that surprises most founders: insurers expect you to call their breach response line before engaging any advisers, even if you think you already know who you want to use. Early engagement lets them establish coverage, confirm that legal privilege covers the investigation, and ensure their panel solicitors are instructing forensic investigators such that work product remains privileged. If you retain forensic firms directly before calling the insurer, you may lose privilege over their findings and create coverage disputes about whether the costs were reasonable.

Sub-limits and aggregate structures:

Cyber policies contain sublimits for specific coverage elements, particularly ransom payments, regulatory penalties, PCI DSS assessments, and media liability. The sublimit operates as a maximum payment for that coverage type, even if your main policy limit is higher.

A £2m policy with a £250k sublimit for regulatory penalties means ICO fines above £250k come from your own funds. A £5m policy with a £100k sublimit for ransomware payments means anything above £100k requires board approval to pay from company funds.

These sublimits create coverage shortfalls when incidents trigger multiple coverage types simultaneously. A data breach affecting payment card data might trigger forensic costs (£150k), business interruption (£300k), customer notification (£200k), regulatory defence and penalties (£400k), and PCI fines (£250k) for total costs of £1.3m. With sublimits capping regulatory and PCI components, the policy pays less than the aggregate suggests.

Better policy structures provide higher sublimits for regulatory and extortion coverages, recognising these as the highest severity elements of modern cyber incidents. Best-in-class policies offer regulatory defence costs in addition to policy limits, such that your £2m limit isn’t eroded by the £300k spent defending the ICO investigation.

Waiting periods and system restoration costs:

Business interruption coverage typically includes a waiting period (6, 12, or 24 hours) before cover responds. During the waiting period, interruption losses aren’t covered, creating a deductible calculated in time rather than pounds.

For SaaS businesses where every hour of downtime loses revenue and damages customer confidence, a 24-hour waiting period can exclude £5k to £20k of loss before coverage starts. Policies with 6-hour waiting periods better match the reality that major ransomware incidents take days to weeks to resolve, not hours.

System restoration costs (rebuilding encrypted systems, replacing compromised hardware, licensing replacement software) are covered by most policies but often subject to separate sublimits or deductibles. The better policies cover restoration costs as part of first-party response without separate sublimits, recognising that restoration is inseparable from incident response.

Preparing for the Claims Process

When you discover unauthorised access, suspect data exfiltration, or find your systems encrypted, the sequence of actions in the first 24 hours determines whether your insurance responds smoothly or creates disputes that delay funding and distract management.

Hour zero to hour two: Internal assessment and containment

Your technical team identifies the incident scope, isolates affected systems, and preserves logs and evidence. This is where most organisations make their first claims error: deploying incident response plans that prioritise system restoration over evidence preservation.

Insurers expect contemporaneous logging of who discovered the incident, what systems were affected, what actions were taken, and what evidence was preserved. Detailed timeline logs created during the incident hold far more evidentiary value than reconstructed timelines created days later for insurer notifications.

The second error: beginning forensic investigation using internal resources or external consultants before calling the insurer. This investigation work may fall outside coverage if conducted before the insurer appointed its forensic panel, and worse, it may not be protected by legal privilege if solicitors haven’t established privilege over the investigation.

Hour two to hour 24: Insurer notification and specialist engagement

Call your insurer’s breach response number (available 24/7 for most commercial policies) and provide initial details: nature of incident, systems affected, data potentially compromised, and actions taken so far. The insurer will ask specific questions to establish coverage and begin appointing breach response panel members.

Within hours, the insurer appoints:

Breach counsel (solicitors who establish legal privilege over the entire investigation and coordinate all other advisers)
Forensic investigators (who take over technical investigation, evidence collection, and scope determination)
Breach coach (who coordinates response activities, regulatory notifications, and customer communications)

These specialists bill directly to the insurer without you funding costs. The breach counsel instructs all other advisers such that their work product is privileged, protecting investigation findings from regulatory or litigation disclosure requirements.

The claims mistake here: working with specialists to determine incident scope and cause before deciding whether to notify the insurer. This delays notification by days or weeks, and insurers interpret delays as evidence you didn’t consider the matter a potential claim. Policies require notification “as soon as reasonably practicable” which claims handlers interpret as within 24 to 48 hours, not weeks.

Days 2 to 14: Investigation and regulatory reporting

Forensic investigators determine what data was accessed, when unauthorised access occurred, whether data was exfiltrated, and how the compromise happened. This investigation informs your regulatory reporting obligations to the ICO (reportable within 72 hours if personal data was accessed) and customer notification obligations (without undue delay, typically interpreted as 3 to 5 days after confirming customer data was affected).

Your breach counsel advises on reporting obligations across all relevant jurisdictions, coordinates ICO notifications, drafts customer communications, and manages media queries. The insurer funds these costs as they’re incurred, provided you’re following the breach response plan and keeping them informed of developments.

The regulatory reality: the ICO expects evidence that you took appropriate steps to secure systems, detect incidents promptly, and respond effectively to contain harm. Your forensic investigation report, privileged by legal advice, provides that evidence. Without insurance funding a professional response, most SMEs compromise these requirements by delaying investigation, cutting corners on evidence collection, or rushing regulatory notifications before understanding the full scope.

Months 2 to 18: Regulatory defence and customer claims

If the ICO opens a formal investigation, your breach counsel coordinates responses to information notices, organises interviews with your technical and executive teams, and instructs expert witnesses on technical security measures. This phase can last 6 to 18 months and consume hundreds of hours of legal time.

Concurrently, customers may issue claims for compensation, contract termination, or cost recovery for their own incident response. Your insurer appoints litigation solicitors to defend these claims (distinct from the breach counsel managing regulatory matters) and funds defence costs plus any settlements or judgments up to policy limits.

The final claims handling surprise: settlement authority sits with your insurer once litigation begins. They control whether to settle customer claims or defend them to judgment. You can influence these decisions, but ultimate authority rests with the insurer paying the costs. This rarely creates conflicts because insurers have stronger incentives to settle meritorious claims quickly than to defend them expensively, but it’s a loss of control that some founder-CEOs find uncomfortable.

SaaS Architecture and Aggregate Exposure Considerations

Technology companies operate in environments where single security failures can create simultaneous claims from hundreds or thousands of customers, exposing aggregate policy limits to rapid exhaustion. Understanding how your architecture creates these aggregation scenarios informs limit selection and policy structure.

Multi-tenancy and the simultaneous claims problem:

A data breach affecting your production database where customer data shares infrastructure doesn’t just create one claim; it creates hundreds of potential customer claims, each seeking compensation for notification costs, business losses, or reputational harm. Your cyber policy responds to all claims arising from a single incident, but policy limits apply in aggregate across all claims.

If your £2m cyber policy faces 500 customer claims each seeking £10k compensation, the aggregate claims value (£5m) exceeds your coverage by £3m. In practice, not all customers pursue claims, and those that do typically settle for less than initial demands. But the mathematical risk of aggregate exhaustion is real for SaaS architectures.

The structural response: higher policy limits or layered coverage where a primary insurer covers the first £2m and an excess layer covers the next £3m to £5m. Excess layers cost significantly less per pound of coverage because they only respond to large multi-claimant scenarios. For fast-growing SaaS businesses, buying a £5m tower (£2m primary plus £3m excess) provides more protection than a flat £2m limit for only marginally higher premium.

API integrations and supply chain incidents:

Your platform likely connects to dozens of third-party APIs: payment processors, identity providers, messaging services, analytics platforms, and hosting infrastructure. A breach affecting one of these suppliers can cascade into your environment, or your breach can cascade into customer environments through your APIs.

These supply chain scenarios create coverage questions about whether the incident “originates” with you or your supplier. If your hosting provider suffers a breach that compromises your environment, is that your incident or theirs? If your API credentials are stolen and used to access customer systems, whose cyber policy responds?

Most cyber policies now include “dependent business interruption” or “contingent business interruption” coverage for losses arising from cyber incidents affecting your critical suppliers. But coverage only responds if the supplier incident meets the cyber policy definition (unauthorised access or similar trigger), not for general supplier outages or service degradation.

The claims reality: establishing whether a supply chain incident meets cyber definitions requires forensic investigation and supplier cooperation, both of which take weeks or months. During this period, you’re funding business interruption losses and customer claims whilst your insurer determines coverage. Policies with broader contingent coverage definitions and lower evidence thresholds respond more reliably to supply chain scenarios.

AI operations and emerging coverage gaps:

If you’re training models on customer data, deploying models that make consequential decisions, or offering model-as-a-service platforms, your cyber exposure includes traditional security risks plus AI-specific scenarios that standard policies don’t address.

Data poisoning attacks where adversaries inject malicious data into training sets to corrupt model outputs create hybrid scenarios combining cyber attack methods with professional liability outcomes. Most cyber policies don’t explicitly cover model integrity failures, and most PI policies don’t explicitly cover adversarial attacks on models.

Similarly, model inversion attacks that extract training data through carefully crafted queries create data breach exposures that sit ambiguously between cyber security failures and architectural design flaws. Did the incident arise from unauthorised access to data, or from intended model functionality being exploited?

The practical implication: if you’re building AI products, work with your broker to obtain specific AI risk endorsements to your cyber and PI policies, clarifying how model-related incidents trigger coverage. As of 2025, insurers are still developing these endorsements reactively rather than offering standardised AI coverage, so expect bespoke negotiation and higher premiums reflecting underwriter uncertainty.

Reference Reading for Cyber Insurance

National Cyber Security Centre (NCSC) – https://www.ncsc.gov.uk/ UK government’s authority on cyber security. When discussing security controls and incident response, reference their practical guidance for businesses

Information Commissioner’s Office (ICO) – https://ico.org.uk/. UK data protection regulator. When discussing GDPR notification obligations and regulatory fines.

Simplify Stream provides educational content about business insurance for UK companies, especially those with high growth business models that require specialist insurance market knowledge. We don't sell policies or provide regulated advice, just clear explanations from people who've worked on the underwriting and broking side.