Selling Cyber Coverage to SMBs: What Agents May Miss
By Jane Doe, Insurance Technology Correspondent
July 30, 2025
Small and medium-sized businesses (SMBs) are increasingly targeted by cyberattacks, yet many remain underinsured or unaware of the risks. For insurance agents, selling cyber coverage to SMBs presents a unique opportunity to address a growing need. However, agents often overlook critical factors that can make or break their ability to effectively market and sell these policies. Here’s what agents may miss when pitching cyber insurance to SMBs.
The Growing Cyber Threat to SMBs
Recent data underscores the vulnerability of SMBs. According to a 2024 Verizon Data Breach Investigations Report, 43% of cyberattacks target small businesses, with ransomware and phishing leading the charge. The average cost of a data breach for an SMB now exceeds $200,000, a figure that can cripple a business without adequate coverage. Despite this, a 2025 survey by the National Small Business Association found that only 27% of SMBs carry cyber insurance, leaving a significant gap in protection.
Misstep 1: Assuming SMBs Understand Their Risks
One of the biggest mistakes agents make is assuming SMBs are aware of their cyber exposures. Many small business owners believe they are “too small to be targeted” or that their existing general liability policies cover cyber incidents. Agents must educate clients about specific risks—such as data breaches, business email compromise, and ransomware—and how these differ from traditional liabilities.
For example, a small retail shop might not realize that a single phishing attack could expose customer payment data, leading to costly legal fees and reputational damage. Agents should use real-world examples and simple language to bridge this knowledge gap, emphasizing that cyber threats don’t discriminate by business size.
Misstep 2: Overcomplicating Policy Details
Cyber insurance policies can be complex, with terms like “first-party coverage,” “third-party liability,” and “social engineering fraud” that may confuse SMB owners. Agents sometimes overwhelm clients with technical jargon or lengthy policy documents, leading to decision fatigue. Instead, agents should focus on translating policy benefits into tangible scenarios. For instance, explain how first-party coverage can reimburse lost income during a ransomware-induced shutdown or how third-party coverage handles lawsuits from affected customers.
A practical approach is to use checklists or infographics that outline what’s covered—such as data restoration costs, legal fees, and public relations efforts—and what’s not. Simplifying the conversation builds trust and makes the purchase decision easier.
Misstep 3: Ignoring Budget Constraints
SMBs often operate on tight budgets, and cyber insurance can seem like an unnecessary expense compared to immediate needs like payroll or inventory. Agents may miss the mark by pitching high-cost, comprehensive policies without exploring affordable options. Entry-level cyber policies with lower premiums and essential coverages, such as data breach response and cyber extortion, can be more appealing to cost-conscious SMBs.
Agents should also highlight the return on investment. For example, a $5,000 annual premium is a small price compared to the $100,000-plus cost of recovering from a breach. Offering flexible payment plans or bundling cyber coverage with other policies can further ease financial concerns.
Misstep 4: Neglecting Industry-Specific Needs
Not all SMBs face the same cyber risks. A healthcare provider storing patient records has different exposures than a construction firm relying on project management software. Agents often pitch generic cyber policies without tailoring them to the client’s industry, which can lead to coverage gaps or irrelevant features.
Agents should conduct a brief risk assessment to understand the client’s operations, such as whether they process online payments, store sensitive data, or rely on third-party vendors. For instance, a restaurant with an online ordering system might need coverage for point-of-sale system breaches, while a consulting firm might prioritize protection against intellectual property theft. Customizing the pitch to address these nuances demonstrates expertise and builds credibility.
Misstep 5: Underestimating the Role of Prevention
Selling cyber insurance isn’t just about coverage—it’s about risk management. Many SMBs don’t realize that insurers often provide resources like employee training, cybersecurity audits, or incident response planning as part of the policy. Agents who fail to highlight these value-added services miss an opportunity to differentiate their offerings.
For example, an agent might emphasize that a policy includes access to a 24/7 incident response hotline or discounted cybersecurity software. These tools can help SMBs prevent incidents, making the policy feel like a proactive investment rather than a reactive expense.
Bridging the Gap
To successfully sell cyber coverage to SMBs, agents must adopt a consultative approach. This means educating clients about risks, simplifying policy details, addressing budget concerns, tailoring solutions to industry needs, and emphasizing prevention. By avoiding these common missteps, agents can build trust and position themselves as partners in protecting SMBs from the growing threat of cyberattacks.
As cyber risks evolve, so must the strategies for selling coverage. Agents who take the time to understand their clients’ unique challenges and communicate value effectively will not only close more deals but also help SMBs thrive in an increasingly digital world.
For more information on cyber insurance options, agents and SMBs can visit resources like the Insurance Information Institute (www.iii.org) or consult with industry experts.