What is the difference between first-party and third-party cyber insurance?

First-party coverage pays for your own business's direct losses like data restoration and lost income, whereas third-party coverage covers your legal liability to others if their data is compromised while in your care.

Are ransomware payments covered under Australian cyber insurance policies?

Yes, many policies include cyber extortion cover for ransom payments. However, under the Cyber Security Act 2024, any Australian business with an annual turnover of $3 million or more must formally report the ransom payment to the Australian Signals Directorate (ASD) within 72 hours. This mandatory reporting rule came into strict enforcement on 30 May 2025.

Do I need Multi-Factor Authentication (MFA) to qualify for a cyber insurance policy?

While not a government-mandated legal requirement to buy insurance, Multi-Factor Authentication (MFA) has become a near-universal baseline underwriting expectation across the Australian insurance market. Most insurers will heavily restrict coverage limits, apply massive deductibles, or completely refuse to quote your business if you cannot demonstrate active MFA deployment across remote networks and administrator accounts.

Does cyber insurance cover employees working from home in Australia?

Yes, most policies extend coverage to remote working environments provided that the business's standard security protocols and authorised devices are being used by the staff.

Is social engineering fraud covered by a standard cyber liability policy?

No, social engineering or 'funds transfer fraud' often requires a specific extension or sub-limit as it involves the voluntary transfer of money rather than a direct technical hack.

Is there a waiting period before I can claim for cyber business interruption?

Yes, most policies include a 'time deductible' or waiting period, typically between 8 and 24 hours, which must pass before you can claim for lost profits due to system downtime.

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What is cyber insurance?

Cyber insurance is a form of business insurance that can financially protect businesses in the event of a cyber attack. provides you with both a safety net to minimise your out-of-pocket expenses when dealing with a cyber attack and access to a team of experts so you can focus on running your business. It is important to note that many standard general liability insurance policies explicitly exclude cyber-related events, meaning that a standalone policy is often necessary to bridge the gap in protection for digital risks.

What does cyber insurance cover?

Cover will vary by provider but typically, you can be covered for:

Data breaches including theft of client information
Network breaches
Business interruption costs
Forensic investigation
Data recovery coast
Cyber extortion
Crisis management costs

Loss and legal costs, including fines and penalties

Modern policies are designed to address the specific methods used by criminals today, such as ransomware and phishing scams. Beyond just covering the loss of data, many insurers provide specialised response services that assist with ransom negotiations and cyber extortion response. Coverage can also extend to fraudulent fund transfers (where criminals trick staff into sending money to the wrong accounts) and the significant regulatory compliance costs associated with notifying affected individuals and government bodies after a breach.

First-party coverage

First-party coverage for loss or damage that directly affects you or your business (e.g. loss of income from system downtime).

Third-party coverage

Third-party coverage for claims made against your business by someone that has been negatively affected by a cyber issue (e.g. legal and compensation costs following a data breach).

Do I need cyber insurance for my small business?

Cyber insurance is not mandatory, however, it's wise to consider. In January - June 2024, The Office of the Australian Information Commissioner (OAIC) received 527 notifications of data breaches. around 59% of those were attributed to malicious or criminal cyber attacks. In the OAIC's July to December 2024 report, human error accounted for 28% of breaches. This highlights that insurance is necessary to cover failures beyond technical IT security, such as a staff member accidentally clicking a malicious link or disclosing sensitive login credentials.

Cyber attacks pose a significant threat to businesses, both financially and reputationally. Cyber insurance can help business owners deal with breaches quickly and keep the business interruption to a minimum.

Why small businesses need cyber insurance

There is a common misconception that cyber criminals only target major corporations, yet Australian small to medium enterprises (SMEs) are increasingly viewed as prime targets. Attackers often focus on smaller operations because they typically have weaker security infrastructure and fewer dedicated IT resources than larger firms. According to the Australian Signals Directorate (ASD) Annual Cyber Threat Report 2024-2025, the average self-reported cost of cybercrime for a small business was $56,571 per incident. For many SMEs, a single breach can be catastrophic, leading to significant operational downtime or even permanent closure.

How are premiums for cyber insurance calculated?

The cyber landscape is frequently evolving which makes mitigating risk, and creating insurance premiums that cover that risk, increasingly difficult. Insurers typically need access to their client's data and IT processes to test their cyber defences and analyse the risk. From there, a price can be formed.

This makes premiums highly personalised and hard to foresee. However, you can get quotes from multiple insurers to know if the quotes seem consistent. From there, you can find a policy that best fits your business needs and budget.

How to buy cyber insurance

Cyber insurance can be purchased directly from an insurer or via a broker. Given the complex nature of the product and coverage needs, many businesses like to enlist the help of a broker. However, for micro-businesses and SMEs with simpler requirements, many providers now offer quick and streamlined online quoting platforms that allow you to get protected in a matter of minutes.

Talk to a broker about cyber insurance

Cyber insurance is a form of business insurance that financially protects businesses from cyber attacks and minimises out-of-pocket expenses.
Coverage typically includes data breaches network breaches business interruption costs forensic investigation data recovery costs cyber extortion crisis management costs and legal costs for first-party and third-party claims.
While not mandatory cyber insurance is a wise consideration for businesses due to the significant financial and reputational threats posed by cyber attacks, with around 59% of data breaches in early 2024 resulting from malicious cyber activity.
Premiums are highly personalised based on a business' IT setup data hygiene and existing cybersecurity software making them complex to foresee, but quotes can be obtained from multiple insurers or via a broker.

FAQs

Yes, many policies include cyber extortion cover for ransom payments. However, under the Cyber Security Act 2024, any Australian business with an annual turnover of $3 million or more must formally report the ransom payment to the Australian Signals Directorate (ASD) within 72 hours. This mandatory reporting rule came into strict enforcement on 30 May 2025.
While not a government-mandated legal requirement to buy insurance, Multi-Factor Authentication (MFA) has become a near-universal baseline underwriting expectation across the Australian insurance market. Most insurers will heavily restrict coverage limits, apply massive deductibles, or completely refuse to quote your business if you cannot demonstrate active MFA deployment across remote networks and administrator accounts.

Sources

Thank you for your feedback!

To make sure you get accurate and helpful information, this guide has been edited by Joelle Grubb as part of our fact-checking process.

Written by

Peta Taylor

Publisher of Insurance

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Peta Taylor is a publisher at Finder, working across all of insurance. She's been analysing product disclosure statements and publishing articles for over 2 years. Peta is passionate about demystifying complex insurance products to help users make well educated decisions with confidence. Peta is part of Finder's insurance awards team and works alongside editorial and insights experts to bring users the best insurance products every year. See full bio

Co-written by

Gary Ross Hunter

Journalist

Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio

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Gary Ross has written 554 Finder guides across topics including:

Health, home, life, car, pet and travel insurance
Managing the cost of living

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Cyber Insurance Australia