In 2023, one of the U.K.’s oldest shipbuilding firms, James Fisher and Sons, fell victim to a catastrophic ransomware attack—all because of a weak password. Hackers gained access to the company’s network through remote desktop protocol (RDP) protected by the laughably simple password “admin.” Once inside, they encrypted data and demanded a ransom, grinding operations to a halt. The firm—founded in 1865—ultimately folded under the weight of the attack and the ensuing fallout.
This isn’t just a cautionary tale about cybersecurity hygiene. It’s a stark reminder that ransomware isn’t just a tech problem—it’s a business killer. Whether your company is 158 years old or 5, one misstep can spell disaster.
Let’s walk through what actually happens after a ransomware incident, what it can cost, and how the right insurance coverage steps in (or doesn’t).
What Is a Ransomware Attack?
Ransomware is a form of malicious software that encrypts your systems or data—essentially holding them hostage until you pay a ransom, usually in cryptocurrency. These attacks are often delivered through phishing emails, compromised software, or exposed network vulnerabilities.
And they’re not just targeting giant corporations. Small and mid-sized businesses are often the most vulnerable.
The Immediate Impact of a Ransomware Event
Once ransomware hits, businesses usually face multiple simultaneous problems:
- Locked systems or data
- Disrupted operations and downtime
- Legal and regulatory exposure (especially if personal data is involved)
- Client and partner fallout
- Ransom demand (sometimes hundreds of thousands of dollars)
The average total cost of a ransomware incident—including downtime, lost revenue, forensic recovery, and legal fees—often exceeds $300,000 for small-to-midsize businesses. In larger incidents, that number can reach into the millions.
Who Pays for What?
This is where cyber insurance comes into play. But not all policies are created equal.
If you have the right standalone cyber policy, here’s what’s typically covered:
- Ransom payments (when legally permitted)
- Forensics and investigation
- Data recovery and system restoration
- Legal counsel and compliance costs
- Public relations support
- Regulatory fines and penalties (where insurable)
- Business interruption and lost revenue
- Third-party liability (if clients sue you over the breach)
If you rely on a bundled cyber endorsement or no coverage at all:
- You may hit sublimits too quickly (e.g., only $25K–$50K for ransom or recovery)
- Business interruption might not be covered
- Third-party lawsuits could fall completely outside your policy
- Some carriers may deny claims based on vague language or exclusions
Who’s Legally Responsible?
This depends on your contracts and where the data originated. If you’re a technology provider, MSP, or SaaS company, you might carry third-party liability even if the breach happened on the client side. Many contracts now include indemnity clauses and security warranties that shift liability onto service providers.
That’s where Technology Errors & Omissions (Tech E&O) coverage comes in—protecting you if clients allege that your product or service caused financial loss.
Real-World Example
A mid-size accounting firm got hit with ransomware through a compromised email attachment. Their data was encrypted, and they were locked out of their systems for 5 days.
- They paid $85K in ransom
- Spent $120K on recovery and legal
- Lost $60K+ in business during downtime
- Faced a lawsuit from a major client who couldn’t access their reports
Their standalone cyber policy covered 90% of the costs—including legal defense in the client suit. Without it, they would’ve been out nearly $250,000.
Final Thoughts: Hope for the Best. Cover for the Worst.
Cybersecurity tools and protocols are essential—but they don’t replace the need for financial protection. Ransomware isn’t a matter of if, it’s a matter of when for many organizations.
A strong cyber and tech E&O insurance program can be the difference between a stressful incident and a full-blown business-ending crisis.
Want to Know If You’re Covered?
SeedPod Cyber specializes in modern cyber and tech E&O insurance for businesses of all sizes—including tough risks. We also work with retail and wholesale brokers to close coverage gaps and build smarter, faster solutions.
Get a quote today by contacting us at https://seedpodcyber.com/contact-us/
Let’s make sure your business is protected when it matters most.