The Importance of Cyber Insurance for Small Businesses: A Real-Life Example
Cybercrime is on the rise, and small businesses are particularly vulnerable. When a rural broadband provider in Michigan fell victim to a sophisticated email scam, they lost over $27,000. But thanks to their proactive investment in cyber insurance, they were able to recover quickly. Cyber insurance can protect your business from the financial fallout of a cyber attack. Here's their story:
The Incident
In February of 2025, our client was paying bills and initiated two ACH payments to a vendor with whom they had two open invoices. However, the vendor soon notified them that they hadn't received the funds. Upon further investigation, our client discovered they had been targeted by a cybercriminal who spoofed the vendor's email and sent fraudulent ACH instructions. As a result, the small business transferred $27,518.47 to a fraudulent account, and the funds were irretrievable. The bank account they sent money to - CLOSED.
Later in the month, they notified their cyber insurance provider, At-Bay, about the incident. The company’s quick action and robust policy helped them recover from this financial blow.
Cyber Insurance Coverage at Work
Our client had an active cyber insurance policy with At-Bay, which had a limit of $1,000,000 for various insuring agreements, including coverage for financial fraud. This clause, which includes protection for fraudulent inducement losses, proved critical in this case.
The fraudulent transfer was covered under the policy’s Financial Fraud section, specifically Fraudulent Inducement Loss, which protects against losses from cybercriminals who manipulate businesses into transferring funds to fraudulent accounts. With a sub-limit of $250,000 for this coverage and a $5,000 retention, the policy ensured that our client would be reimbursed less the retention amount.
Once the claim was investigated, At-Bay swiftly paid the covered loss, just as the insurance was designed to do. The financial support helped our client recover much-needed funds and continue their business operations without significant disruption.
Why Every Small Business Needs Cyber Insurance
This incident highlights a key takeaway for small businesses: cyber threats are real, and they can cause devastating financial losses. In this case, a simple email fraud led to nearly $28,000 in lost funds that could have severely impacted the business. But thanks to cyber insurance, our client was able to mitigate the damage.
Here’s why cyber insurance is critical for small businesses:
Financial Protection Against Fraud: Cyber criminals are constantly evolving their methods, and businesses without cyber insurance risk absorbing the entire financial loss.
Quick Resolution: Cyber insurance helps businesses quickly resolve incidents, providing financial assistance to cover losses, legal fees, and recovery efforts.
Peace of Mind: Knowing that your business is protected against cybercrime can allow you to focus on growing your business without worrying about the next potential attack.
The Bottom Line
For small businesses, having the right cyber insurance policy is no longer optional. Whether you're a rural broadband provider, a local retailer, or a service business, cybercrime can strike at any moment. This claim exemplifies how having the proper coverage in place can help businesses recover quickly and efficiently from financial setbacks caused by cyber fraud.
If you haven't yet considered cyber insurance for your small business, now is the time to do so. Protect your company from the financial fallout of cybercrime with the right policy in place.
If you're ready to start vetting your cyber insurance options, we’re here to help - contact us todayor request a quote and we’ll walk you through what makes our agency different.
If you’re looking for and insurance agent in Michigan. You may also like to take a look at these great resources for insurance:
Now you’re either currently investing a lot of money into your insurance policies or getting closer to making this decision. We don’t want you to make any mistakes with a decision of this magnitude. So instead of basing this huge decision on a quoted number on the computer screen or a piece of paper – we thought you’d like to know that you can work with one of the knowledge members of our team so that you can become well educated on your insurance before buying.
For more insurance and risk management guidance or questions about your policy's coverage limits, contact us today.
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A third-generation insurance agency owner and agent since 2007, Tyler Bartosh is the consummate “insurance geek,” using his passion for business, knowledge of insurance, and advocacy for clients to help serve as the expert buyer of insurance. He helps businesses implement risk management strategies that save both time and money, so those resources can be put towards other initiatives in your company.
Away from his career in insurance, he enjoys spending time with his family & friends, volunteering throughout the community, golf, fishing, snowboarding, hiking and virtually anything outdoors and traveling to see live music. Tyler has a wife Emily (who is also an underwriter in the insurance industry), their dog Lucy and a baby girl, Sophie Constance.
About Top O' Michigan Insurance Solutions:
At Top O’ Michigan Insurance Solutions, we pride ourselves on using our skills to provide clients with competitive pricing, stability and understanding, and peace of mind. With seven locations throughout Michigan and 24/7 client access, our team is your 'expert buyer' of insurance for home, auto, farm, boat, motorcycle, business owners, workers compensation, bonds, life and health, employee benefits and more.
We will provide unparalleled and caring service to our clients through our knowledgeable staff and give back to our employees, agency, industry and our communities. Part of our mission is to give back to the Michigan communities we serve. This is something we take action on through We Care and you can learn more about our community outreach at TOMIA247.com/WeCare.
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