Cyber insurance doesn’t stop a cyberattack from happening; it only reacts after the damage is done. Despite rising premiums, some businesses choose cyber insurance, assuming it will protect them completely.
You may wonder what cyber insurance covers and what cyber insurance doesn’t cover. Today, we’ll be going over cyber insurance in-depth to see what it covers, what it doesn’t, and a potentially better alternative to cyber insurance.
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What Does Cyber Insurance Cover
Cyber insurance covers the losses an enterprise may suffer because of a cyberattack. But what does cyber insurance really cover? It can differ from provider to provider, but based on this source, it can cover:
- Funds Transfer Fraud: This can be protection against social engineering attacks such as phishing or business email compromise (BEC). Where criminals manage to redirect payments to themselves from a business.
- Ransomware Attacks: Policies may cover ransom payments, restoration of damaged or encrypted data, and potential legal costs. But with insurance, the coverage varies by policy and insurer.
- Service Fraud and Computer Replacement: Provides reimbursement for unauthorized usage of cloud services (e.g., cryptojacking) and replacement of devices made unusable by malware.
- Vendor Risk: Mitigates third-party risk from vendor breaches by covering privacy claims, regulatory penalties, and business interruption losses.
- Physical Consequences of Cyber Incidents: Can cover bodily injury and property damage caused by cyberattacks, like disrupted medical devices or sabotaged manufacturing equipment.
But the coverage options are subject to strict conditions, slow approvals, or low caps.
In 2024, more than 40% of cyber insurance claims were denied.
While some policies may look good on paper, they can quickly change once you’re in crisis mode. Now we’ll cover what cyber insurance doesn’t cover.
Photo by CFC
What Cyber Insurance Doesn’t Cover
Based on the provider we discussed, there is a lot that cyber insurance doesn’t cover. But it depends on the provider and the kind of insurance you choose. Here are a few things cyber insurance typically doesn’t cover, according to this source:
- Human Error: Human error can be something as clicking on a link in an email you thought was from a client or vendor. That’s why 95% of data breaches are tied to human error. All it takes is one person to slip up to potentially cripple an organization, and cyber insurance doesn’t cover that.
- Insider Attacks: While it can differ, generally, cyber policies do not cover losses stemming from intentional or negligent attacks. Interesting since in one study it found that 83% of organizations reported at least one insider attack in the last year.
- Poor Security Processes: Attacks resulting from ineffective security processes or poor management generally aren’t covered. So, if your business failed to implement proper cybersecurity practices, coverage could be denied.
While cyber insurance may be a valuable safety net for some, it’s not a catch-all. Coverage varies by policy, and failing to meet strict requirements can lead to denied claims. Additionally, businesses have reported dealing with challenges like delayed payouts, denied claims tied to unclear policy language, or legal gray areas.
While some cyber insurances can be proactive, that is not their intended design. We believe there are other affordable options out there that can give you the same, if not better, quality of service. That’s why we recommend looking for a managed service provider (MSP).
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Why an MSP (Like Us) Is the Better Investment
A managed service provider (MSP) is a third-party company that provides IT and cybersecurity services. That’s exactly what we do. We agree that cyber insurance can be valuable for some, but if you want proactive security that is designed to prevent attacks, then you should choose an MSP. Our goal is to stop the attack from ever happening, not just clean it up. Some of our services include:
- 24/7 Monitoring & Response
- Backup & Disaster Recovery
- Employee Training
- IT Support
- Network Monitoring
- Help Desk
- Co-Managed Services
- And More
Our goal as an MSP is this protect our clients with real-time monitoring and give them proactive solutions to strengthen their IT and cybersecurity infrastructure.
Cyber insurance may help businesses recover financially after an attack. But we focus on stopping them before they happen. We handle threats cyber insurance typically covers, and those it often excludes.
Cyber insurance may help pay for cyberattacks. While we work to prevent them.
Cyber Insurance Doesn’t Stop Hackers. We Do
Our MSP is built on being a proactive, responsive, and reliable partner to all our clients. Operating this way has helped us gain a reputation as a trusted partner to our clients and being regarded as a top 250 MSSP.
If you’re unsure whether to go with an MSP or cyber insurance, we offer a free Cybersecurity and IT Infrastructure Assessment. This will help you figure out your cybersecurity and IT vulnerabilities and get expert guidance on your infrastructure, with no fluff, just facts.
Contact us today to secure your business!
Call Us: (479) 434-1400 – Speak directly with our IT and Cybersecurity team.
Visit Our Website: www.kirkhamirontech.com – Learn how we can strengthen your business.
Email Us: info@kirkhamirontech.com – Let us know your cybersecurity goals.
Tom Kirkham brings more than three decades of software design, network administration, and cybersecurity knowledge to organizations around the country. During his career, Tom has received multiple software design awards and founded other acclaimed technology businesses.
