Cyber insurance has become a non-negotiable part of every cybersecurity program. But many business owners assume that once they have a policy, their claims will be approved without pushback. Unfortunately, that is far from reality. Insurance providers now scrutinize every detail to determine whether your business exercised “due care” in preventing an attack.
Even if you have a cyber policy, there is no guarantee your insurer will cover the costs of a breach.
Coverage Denials and Claims Rise
Ransomware attacks continue to escalate, and supply chain–based breaches are now a major concern. In response, insurers have tightened their risk models dramatically. Some carriers have reduced coverage or exited the market altogether, while many others have increased premiums by 40 to 60 percent.
At the same time, the claims process itself has become more complex. Ransomware-related claims often involve:
• IT forensics
• Legal costs
• Business interruption losses
• Data restoration expenses
Businesses must now undergo in-depth reviews and supply extensive documentation before a carrier will even consider covering an incident.
The New Reality of Insurance
According to the 2021 Coalition Cyber Insurance Claims Report, social engineering incidents increased 51 percent in the first half of 2020. As a result, insurers now require policyholders to implement baseline cybersecurity controls as a condition of coverage.
During underwriting, you must prove your security program matches your risk profile. That includes demonstrating:
• Routine testing
• Regular employee training
• Strong detection capabilities
• A defined incident response process
Insurance companies request logs, questionnaires, and supporting evidence. No detail goes unnoticed.
No Insurance Is Risky Business
Skipping cyber insurance is not a viable option. Operating without coverage can expose your organization to severe legal, financial, and reputational consequences.
A denied claim can happen for a number of reasons, including:
• Failure to maintain required cybersecurity controls
• Errors, omissions, or inconsistencies during your initial risk assessment
• An attack that began before your policy start date
• Ransomware tied to nation-state actors (often considered an act of war)
• Conducting your own forensic investigation before consulting your insurer
Being unprepared can jeopardize business continuity, profitability, customer trust, and even safety.
Plan, Prep, and Execute
Cyber insurance typically includes two types of coverage:
• First-party coverage – protects your organization directly
• Third-party coverage – protects you from claims made by customers or partners
But no policy is fully comprehensive. Costs that are commonly not covered include:
• Downtime or business interruption tied to loss of sales
• Technology upgrades or new systems implemented after a breach
• Security hardening measures
• Losses caused by cloud misconfigurations or administrative mistakes
Understanding these gaps—and planning for them—is essential.
Best Practices to Avoid a Denial
If you are applying for cyber insurance or renewing an existing policy, prepare to share detailed information about your business operations and cybersecurity posture. Best practices include:
• Establish full transparency into your risks
• Create a baseline of your security controls
• Implement and document policies, procedures, and incident response plans
• Conduct tabletop exercises and regular assessments
• Review policies carefully to ensure coverage matches your needs
The stronger your program, the better your chances of receiving coverage at a reasonable cost.
Industry Leading Cyber Security at Mindcore
Not all cyber insurance policies are created equal—and neither are the security expectations that come with them. Organizations without dedicated IT security teams are especially vulnerable and often need additional support to meet insurer requirements.
While no one can guarantee claim approval, Mindcore helps businesses across New Jersey and Florida build strong cybersecurity programs that exceed insurance provider expectations.
We deliver proactive, high-quality security solutions that strengthen your defenses and support your compliance needs.
Contact us today to learn more or schedule a consultation with a member of our team. .
