What Does Cyber Insurance Not Cover? (2024)

Many places and websites will talk about the great benefits of cyber insurance, including almost any cyber insurance policy sample or cyber insurance policy pdf you can find. But if you’re considering cyber insurance, you need to know each aspect of the insurance—including the not-so-great stuff.

The truth about cyber liability insurance is that there are some things that cyber insurance simply won’t cover for your business. What does cyber insurance not cover?

First, cyber insurance typically won’t cover future profit loss after a cyber attack. If a cyber attack causes you to lose customers and consequently lose profit, cyber insurance will not reimburse you for that profit loss.

Also, most cyber liability insurance policies don’t cover your business for a decrease in company value. For example, your intellectual information could be stolen through digital crime. Without that information, your company becomes less valuable overall, but insurance providers will not cover that loss of value.

Finally, cyber insurance won’t pay for a security system upgrade. Even if you want to enhance your security system after a cyber attack to prevent future attacks, your insurance will not cover the cost of those upgrades.

Now, remember, different policies have different coverage limits, so you could probably find other aspects of digital crime that a specific insurance policy won’t cover. But the aspects mentioned here are general things that insurance policies seldom cover.

What Is Cyber Insurance?

Now that the question of what does cyber insurance not cover is answered, the unpleasant information about cyber liability insurance is out of the way, and you can explore more positive aspects of cyber insurance.

Of course, some of the most important and helpful questions to answer include what is cyber insurance and why do you need it, so let’s dive into those questions first.

What is cyber insurance? As any cyber insurance pdf would probably tell you, cyber insurance is a type of insurance meant to provide organizations with financial security against the adverse effects that a cyber attack may cause. It can cover direct financial loss from a security breach and the services necessary to recover after a cyber attack.

But cyber insurance comes in many different forms. You can get cyber insurance for individuals, which typically focuses on protection against identity theft. Or you can get cyber insurance for small businesses, which either includes first-party coverage, third-party coverage, or both. There is also cyber insurance for enterprises, and it will include some combination of first-party and third-party coverage as well.

To get this insurance, there may be several cyber insurance requirements your business has to meet. As Ryan Dunn, the Director of Insurance here at Trava, explained, it is getting harder and harder to qualify for cyber insurance as the requirements become more strict and the cyber insurance market hardens.

Yet, cyber insurance is still a worthy investment because it can cover most of the costs associated with a cybersecurity breach. These costs are significant, including anything from notification systems for affected customers to forensic services for data recovery. So, having these costs covered is a major cyber insurance benefit.

What Does Cyber Insurance Cover?

Speaking of covering the costs of cyber attacks, what does cyber insurance cover anyway?

Does cyber insurance cover ransomware? What about general cyber extortion? Or does it cover the loss of funds from a phishing attack? The answer to all those questions is yes. There are cyber insurance policies for ransomware, general cyber extortion, and phishing attacks.

But more generally speaking, cyber insurance can cover a wide variety of losses and costs associated with digital crime including data recovery, forensic specialists, and loss of income from business interruptions. Policies also might cover court costs and other legal fees, like claims and settlements for liability. Finally, cyber insurance can cover customer reparations, including public relations services, customer notification systems, and even credit monitoring for the affected customers.

But unlike the question of what does cyber insurance not cover, which mentions things not included in a policy, the question of what does cyber insurance cover has greatly varied answers based on the policy and the insurance provider. For example, a policy that Chubb Cyber Insurance offers is vastly different from a policy that a different company offers. Also, a policy of cyber insurance for businesses will cover many different risks that cyber insurance for individuals won’t include.

With all these different coverage options, it may be helpful for you to have a cyber insurance coverage checklist. This checklist can guide you through specific coverage options to look for in an insurance policy.

Here is a good cyber insurance coverage checklist to start with:

• Cyber extortion coverage (including ransomware)
• Social engineering coverage (including phishing campaigns)
• Lost of income coverage for business interruptions
• Dependent business interruption coverage
• Virus transmission coverage
• Liability coverage
• Data breach coverage (all types, not just digital)

As you look at your business's specific vulnerabilities, you may find some coverage options that you want to add to this checklist. But you can use this checklist as a springboard for your own customized checklist of insurance coverage requirements.

What to Look for in Cyber Insurance Coverage

While using a checklist and looking at insurance policies, you need to know exactly what to look for in cyber insurance coverage. Yes, the checklist of coverage options is a great place to start, but there are many other aspects of insurance coverage you need to examine.

First, go back to the question of what does cyber insurance not cover. Every policy has limitations, and you want to clearly understand those limitations before committing to a policy. There will probably be more limitations than the ones discussed in the section on what does cyber insurance not cover, and that is okay. But if the limitations are strict and will not provide sufficient coverage for your business in the event of a cyberattack, you need to find a different policy. You shouldn’t pay for something that will not serve you when you need it most

Wondering how to determine cyber insurance coverage? The best way is to speak with a cyber insurance broker. You can ask them specific questions about the different policies, and they should give you honest answers as they usually aren’t biased toward any of the cyber insurance companies, unlike some insurance agents and a cyber insurance pdf can be.

Finally, you should look at the cyber insurance requirements. 2022 has brought even more requirements, and some carriers are forcing enterprise-level security requirements on small businesses. So, look over the requirements for the insurance policy carefully and make sure that you can meet them without major difficulties.

Types of Cyber Insurance

As you look for coverage—determining what does cyber insurance not cover and cover—there are two primary types of cyber insurance you may come across in the cyber insurance market: first-party coverage and third-party coverage.

First-party coverage will protect your company data, whether that is employee or customer information or other sensitive business information. This coverage typically pays for costs like recovery of stolen data, lost income due to business interruption, customer notification and call center services, cyber extortion, forensic services, public relations expertise, and other fees and fines related to the cyber attack.

Third-party coverage protects your liability for a cyber attack if a third party brings claims against you. This coverage typically includes costs like claims and settlements for lawsuits, losses related to copyright infringement, and other legal fees.

Each coverage option has different cyber insurance benefits that can help your company recover. But all the different options make it difficult to choose the right cyber insurance. Even if you just want cyber insurance for individuals, the choices are too vast and there isn’t any cyber insurance pdf that can give you the answers you need.

Faced with all these decisions, the best solution is to work with a company that can assess your vulnerabilities carefully, repair any weaknesses you can, and insure your company—protecting you from the remainder of your vulnerabilities. This company will ensure that its policy meets your cyber insurance requirements and best protects your business.

That company is Trava. As a unique cybersecurity solution for small and medium-sized businesses, we will work with you to develop a cybersecurity plan that fits your business goals and situation.

Our thorough assessments can easily identify your cyber threats, and our mitigation tools will repair your system vulnerabilities to reduce the risk of a cyber attack. But we won’t stop there. We also provide insurance that will cover the cost of cyber extortion, restoration of electronic data, loss of income from business interruption, public relations services, security breach liability, and other response and remediation services after a breach.

There is so much more we can do for your company to help you thrive—even after a cyber attack. So, discover the power of insurance and cybersecurity designed just for your cyber risk. Contact Trava today!

Sources

• https://www.travasecurity.com/resources/what-your-cyber-insurance-policy-does-and-doesnt-cover
• https://www.travasecurity.com/resources/cyber-insurance-explained-who-what-why-and-how‍
• https://www.travasecurity.com/resources/the-evolution-of-cyber-insurance-part-1
• https://www.travasecurity.com/resources/the-evolution-of-cyber-insurance-part-2
• https://www.ftc.gov/business-guidance/small-businesses/cybersecurity/cyber-insurance