You log in to your laptop and see a red skull screen: “All your files are encrypted. Pay 2 Bitcoin ($150,000) to unlock.” All your client notes, billing info, and intake forms are gone. You panic.
Key Takeaways
- Ransomware is Standard: In 2026, automated AI bots target small coaches, not just big hospitals.
- Cyber Extortion Coverage: You need a standalone Cyber policy or a robust rider. This pays the ransom (if legal/necessary) or pays for data reconstruction.
- Forensics Costs: The biggest cost isn’t the ransom; it’s the IT team needed to verify if data was stolen (exfiltrated) or just locked.
- Business Interruption: If you can’t work for 2 weeks because your files are locked, Cyber insurance pays your lost income.
The “Why” (The Trap): The “Electronic Data” Exclusion
I checked a General Liability policy (Property section).
“Electronic Data” is excluded from Property coverage. If your laptop is stolen, they pay for the hardware (
1,000).Theypay∗∗1,000).Theypay∗∗
0** for the data inside it.
To get the ransom paid or the data restored, you must have “Cyber Liability & Extortion” coverage.
[IMAGE: Screenshot of a ‘Ransomware Demand’ screen]
The Investigation: Paying the Hacker
I compared Cyber options.
1. Coalition (Active Cyber Insurance)
- My Analysis: The gold standard in 2026.
- The Benefit: They have a team that negotiates with the hackers for you. They verify if the decryption key works before paying.
- Prevention: They scan your website for holes before you get hacked.
2. Hiscox Cyber Rider
- My Analysis: A cheaper add-on to a coach policy.
- The Limit: Often low ($25k or $50k).
- The Verdict: Better than nothing, but might not cover the full forensic bill.
3. Cowbell Cyber
- My Analysis: Good for small businesses. uses AI to rate your risk.
Comparison Table: Cyber Coverage
| Carrier | Pays Ransom? | Pays Forensics? | Negotiates? |
| Coalition | Yes | Yes | Yes |
| GL Rider | Maybe (Sub-limit) | Limited | No |
| None | No | No | No |
Step-by-Step Action Plan
- Disconnect Internet: Unplug the ethernet/WiFi immediately to stop the spread.
- Do Not Pay (Yet): Call your Cyber Insurance hotline. They will tell you if paying is illegal (OFAC sanctions list) or necessary.
- Call the Forensics Team: The insurance provides this. They check if client data was stolen. If yes, you have a HIPAA breach (see previous article).
- Restore from Backup: If you have an offline backup (hard drive), you might not need to pay.
FAQ Section
Is it illegal to pay ransom?
It can be. If the hacker is on a terror watchlist (OFAC), paying them is a federal crime. Insurance checks this for you.
Will I get my files back if I pay?
About 70% of the time. Sometimes the hackers ghost you. That’s why backups are key.
Does insurance cover the Bitcoin cost?
Yes, Cyber Extortion coverage reimburses the crypto payment.