Cyber Insurance Downtime Cost Estimator

1. Describe the outage
Enter total downtime and the hourly revenue associated with the disrupted operation.

2. Set contribution margin
Use the share of lost revenue that represents contribution after variable costs.

3. Add labor impact
Enter affected employees and loaded hourly labor cost.

4. Include extra costs
Add emergency response, customer credits, vendors, communications, and similar outage costs.

5. Enter policy assumptions
Add the waiting period, expected covered share, and business interruption sublimit.

6. Compare gross and uninsured cost
Review the estimated claim recovery and the amount retained by the organization.

Estimated recovery = min(((Covered downtime cost after waiting period) + Extra costs) × Covered share, Sublimit)

Gross downtime cost equals lost contribution plus idle labor plus extra costs. Covered downtime hours equal total hours minus the waiting period, floored at zero. The same hourly contribution and labor assumptions are applied to covered hours. This simplified model does not include deductibles beyond the waiting period, exclusions, coinsurance, aggregate limits, or claim adjustments.

What the result means

The main result is an estimate based on the entered scenario and should be interpreted together with the breakdown and assumptions.

Use internal data where possible and test a range of assumptions when uncertainty is material.

Given

• 30 hours total downtime
• $80,000 revenue per hour
• 42% contribution margin
• 220 employees at $58 per hour
• $180,000 extra costs
• 8-hour waiting period
• 70% covered share
• $1,500,000 sublimit

Calculation

Gross lost contribution = 30 × $80,000 × 0.42 = $1,008,000

Gross idle labor = 30 × 220 × $58 = $382,800

Gross cost = $1,008,000 + $382,800 + $180,000 = $1,570,800

Covered hours = 30 − 8 = 22

Eligible base = (22 × $80,000 × 0.42) + (22 × 220 × $58) + $180,000 = $1,198,760

Estimated recovery = min($1,198,760 × 0.70, $1,500,000) = $839,132

Uninsured cost = $1,570,800 − $839,132 = $731,668

Result

Estimated uninsured downtime cost: $731,668

Interpretation

Under these assumptions, insurance offsets about 53% of gross modeled downtime cost, with the waiting period and covered share driving most of the retained amount.