You knew cybersecurity was important, so you got cybersecurity insurance. Now, after an incident, your insurance company is refusing to pay. As if you needed any more stress right now. Let’s talk about cyber insurance and how you can stay on the same page as your insurance provider.
Note: This blog is not legal advice, but aims to help your business meet cybersecurity insurance requirements.
What Does Cyber Insurance Cover?
Cyber insurance is intended to mitigate or cover financial losses and legal fees related to a cyberattack. Typical coverage includes:
- Data Breaches: Unauthorized access to personal or proprietary information.
- Ransomware Attacks: Threatening to reveal or destroy stolen data for a price.
- Business Interruption: Operational setbacks like supply chains, customer interactions, etc.
- Legal Costs: Fees from lawyers and courts to remedy the effects of the breach.
While having insurance is a great first step, your business needs to follow the specific requirements in your policy.
Avoiding Common Mistakes Leading to Claim Denials
What’s the point of having insurance if your claims get denied? Here are a few common reasons insurance companies deny claims:
1. Failure to Implement Proper Security Measures
Cybersecurity best practices recommend implementing authorization. According to a recent study, 54% of SMBs do not implement MFA for their business. Of the 46% of businesses that implement MFA, only 28% require using it. Not using MFA or neglecting regular software updates can put you at risk for claim denials.
2. Inadequate Employee Training
Training your employees against phishing techniques and other cyberattacks can improve your protection. Not only will your employees be more prepared, but it can also encourage claim eligibility. Providing employee training is an effective way to prevent cyber risks from human error.
3. Failure to Notify Insurer Promptly
Insurance policies typically require prompt notification in the event of a claim. Some policies will have a specific timeframe while others may describe it as “prompt.” Understanding to whom, when, and what needs to be reported to an insurance company in the event of an attack is critical.
4. Lack of Adequate Backups
If your company doesn’t regularly back up your data and information, your data loss may be considered preventable. Insurers want to mitigate risk, and this is one way to prevent data loss and claim denial.
5. Unsecured Remote Access
Currently, many companies use a hybrid or fully-remote system. This practice comes with certain risks, as people working remotely may have unsecured devices or networks.
6. No Incident Response Plan
An incident response plan prepares your employees to know what to do following a cyberattack. Not all policies require an incident response plan, but it’s still a good idea. If your policy does require one, failing to follow that fine print may be the reason your claim is denied.
7. Pre-existing Vulnerabilities
System vulnerabilities can result in claim denials. Many insurers require addressing issues before offering coverage, but unresolved gaps could still lead to denied claims when it matters most. It’s similar to a pre-existing health condition; some companies will cover a new injury, while some need definite proof the injury is not related to the prior condition.
8. Policy Exclusions
One of the most important parts of a policy is its exclusions. As the policyholder, you must be aware and understand what your policy covers and what it doesn’t. Neglecting this review could leave you asking for something not included in your policy.
Are You Meeting Cyber Insurance Requirements?
Complying with your cyber insurance policy is as necessary as getting one in the first place. While consulting your legal counsel and reviewing your policy is essential, these general tips can be useful:
- Enable Multi-factor Authentication (MFA): Protect all accounts with MFA to reduce unauthorized access risks.
- Perform Regular Software Updates: Keep systems and software updated to patch vulnerabilities.
- Train Employees: Proper training and getting everyone on board can prevent data breaches caused by human errors.
- Secure Remote Access: Providing VPNs and endpoint protection can protect remote employees and your company data.
- Daily Backups & Recovery Plans: Backup your data regularly (if not daily) and create a recovery plan that works.
- Create an Incident Response Plan: An incident response plan can prepare your team to know what to do on all sides of a cyberattack.
- Perform Regular Security Audits: Regular security checks can find and resolve gaps before they lead to data breaches.
These practices can help you when filing a claim and often assist in lowering your rates.
How MSPs Can Help Your Business Stay Secure
Cybersecurity is essential to protecting your business, but it can be difficult to know how to implement proper safety procedures. A managed service provider (MSP) can ease the process. They provide:
- Security Infrastructure: Incorporate firewalls, encrypt traffic, and authentication systems.
- Compliance Monitoring: Follow specific industry regulations and policy guidelines.
- Proactive Threat Management: Monitor trends, train employees, and implement practices to protect your business.
While MSPs can greatly benefit your company, work with your legal counsel and insurance provider. They can aid in determining whether or not you qualify for a payout.
Whose Responsibility Is It, Really?
Protecting your business from cyber threats requires cohesive efforts between your business, your MSP, and your insurance provider. A good understanding of responsibilities can give you some peace of mind.
Your Business
It is generally your responsibility to maintain cyber hygiene. This means being proactive about keeping your company safe from cyberattacks. Follow your insurance policies and industry best practices, and if an incident happens, report it as soon as possible.
Your MSP
MSPs can help you adhere to your policy guidelines, but they aren’t liable for maintaining them. Communicate your goals and expectations to work effectively with your MSP.
The Insurance Provider
Insurance companies outline the policy and assess your claim. They will figure out if you’ve met the requirements to receive a payout. It’s important to provide adequate evidence and documentation as part of your claim.
Please consult your insurance provider or legal counsel for specific questions about your policy or coverage. This blog is not legal advice.
Take Action Today with RedNight
If you are looking for an MSP to help you stay protected, RedNight is your solution. We take a proactive approach to cybersecurity to mitigate risk and improve your claim eligibility.
Don’t wait until you’re faced with a claim denial. Learn more about how our managed services can help your business stay on top of threats today.