Many businesses assume that once they purchase cyber insurance, they are protected from the financial fallout of a cyberattack. Unfortunately, that assumption is often misplaced. Cyber insurance policies frequently contain strict conditions and exclusions that can limit or even void coverage during the very incidents companies expect to be covered. For example, many policies require that the insured maintain specific security controls such as multi-factor authentication, timely patch management, endpoint protection, or employee security training. If an investigation following a breach finds that one system lacked a required control, or that internal procedures were not followed exactly as represented in the insurance application, the insurer may argue that the policy conditions were not met. In some cases, claims are denied because the insurer determines the organization failed to maintain the security posture it certified when applying for coverage.
Another common gap appears in the types of incidents that are actually covered. Losses from social engineering, business email compromise, fraudulent wire transfers, and attacks originating through third-party vendors or managed service providers are sometimes restricted, capped at very low limits, or excluded entirely unless special endorsements are added. In addition, some policies exclude losses tied to vendor outages, cloud service failures, or contractual liabilities with clients after a breach. The result is that organizations may discover, after an incident, that the coverage they believed would protect them does not apply to the most common cybercrime scenarios. For this reason, businesses should periodically review their cyber insurance policies alongside their cybersecurity practices to ensure that both align and that critical risks are actually covered.
Don’t wait for an incident to find out that you may be denied or that your coverage is inadequate. Contact us for a policy review, gap analysis or cybersecurity assessment.