Cybersecurity Insurance Alone Isn’t Enough: Here’s Why

Cybercrime is expected to total $10.5 trillion annually by 2025. So it’s understandable why organizations seek out cybersecurity insurance to help offset the financial damage caused by an attack. 

Cybersecurity insurance is a wise investment, but it should be only one part of your security risk mitigation plan. Don’t rely on cybersecurity insurance to cover every penny lost or prevent the attack in the first place.

You buy auto insurance if something happens, but that doesn’t mean you start driving recklessly. On the contrary, you still maintain awareness and do everything you can to avoid hitting another car. 

That same idea needs to apply to cybersecurity insurance. It’s there to help if something happens, but businesses should still take every precaution to prevent having to use it. For example, organizations must still proactively secure endpoints, prevent social engineering attempts, and conduct a regular cyber insurance risk assessment. 

Today, we will examine what you need to know before buying a cybersecurity insurance plan and what you need to know once you have it. Read on to ensure you’re as protected as possible from costly cyber attacks.

Cybersecurity Insurance Alone Isn’t Enough: Here’s Why

Lower Your Risk – Lower Your Rates

A cyber insurance provider will closely examine your company before agreeing to insure you. You must already meet a minimum level of acceptable cyber insurance risk management to obtain coverage. Cyber insurance providers receive too many inquiries to keep up with and will simply dismiss your request for coverage if you are deemed high risk.

Decreasing your risk with robust cybersecurity processes, an incident management plan, and a business continuity management program will indicate to the insurer that you’re doing everything possible to prevent attacks. These policies will likely mean that you’ll be able to obtain coverage and even possibly secure a lower premium. 

Cybersecurity Insurance Has Several Ways to Avoid Paying

The journey isn’t over once your business is insured. Nearly every insurer will have exclusions clauses to entirely avoid paying for an incident if your organization is not reasonably protecting itself from attacks. 

Every cyber insurance company has unique policies. Make sure that you fully understand your responsibilities to be covered if an incident occurs. Let’s explore some of the common reasons you might not be covered for an attack.

Human Errors May Be Your Responsibility

Depending on your provider, human errors that lead to a cyber attack may not be covered at all. 

For example, let’s say a developer makes an error during the development of an application that allows an attacker to gain access to sensitive information and resources. The attack won’t be covered if your insurer has an exclusion for attacks resulting from errors

Even without a human error clause, failing to adequately test the application during development can be interpreted as failing to meet the minimum requirements outlined in the policy. Thorough testing and documentation of said testing can help prevent a lapse of coverage during an attack.

Lack of Third-Party Analysis and Protections

Businesses are increasingly dependent on other entities, ranging from cloud services to payment processing. You simply can’t afford to assume that the organizations you work with properly secure their systems. 

It’s essential to conduct a thorough vendor assessment with every organization before you partner with them. For example, what are their security policies? Are there any gaps that may lead to an attack that compromises your data or systems? Can you protect against them, or do you need a different vendor?

If an attack occurs due to a compromised vendor, proving that you conducted a vendor assessment and reasonably protected your systems will help ensure the insurer covers the attack.

Insufficient Risk Mitigation Can Void Coverage

You need a cyber security protection plan that adequately mitigates the risk of an attack occurring. Your organization should be well aware of any possible attack vectors and do everything in its power to defend against them. 

If an attack occurs, the cybersecurity insurance provider will thoroughly investigate your systems and your documented risk mitigation processes. 

Were documented processes sufficient, and the attack occurred despite your organization’s best efforts? Or could you have possibly done more to prevent the attack in the first place? If the insurer decides on the latter, your organization may not be covered whatsoever. 

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Don’t Make Cybersecurity Insurance Your Primary Defense

Just like auto insurance, you shouldn’t depend on cybersecurity insurance to prevent attacks from occurring. The best auto insurance policy imaginable isn’t going to shield your car from a collision, and neither will a cybersecurity insurance policy shield your systems and data.

Cybersecurity insurance should be treated as a helpful tool to cover the cost of an attack and nothing more. So don’t make the mistake of relying on it as a security tool.

Your primary defense against attacks should be robust policies and systems that thwart cyber criminals from succeeding in the first place. Some examples of protecting your sensitive (and valuable) data include:

  • Regular Employee Training: Every employee needs the training to prevent inadvertently enabling a cyber attack. They are typically done through phishing emails or other social engineering attacks, and criminals are constantly trying new strategies. Employees throughout the organization can put your systems at risk. Make regular training mandatory to reinforce good practices and inform them of the latest attacks they may face.
  • Keep Every System and Application Updated: Malicious software is written to exploit known bugs and vulnerabilities in your software. Keeping everything in your tech stack and infrastructure updated minimizes the possibility of malware using a known vulnerability. Systems and applications are updated to add new features and fix bugs that create vulnerabilities that cyber criminals exploit. 
  • Make Strong Passwords Mandatory: Don’t make strong passwords a suggestion; make it impossible to use a weak password. The increase in remote work has given way to additional attack vectors made possible by poor password policies. Make brute forcing an employee’s password as complex as possible. 

Ensure Real-Time Compliance with the Right Security Frameworks

You don’t need to reinvent the wheel. Cybersecurity frameworks exist to help keep your system protected. Remaining compliant with relevant frameworks will protect your system and assure cybersecurity insurance providers that you’re maintaining the expected level of security. 

Centraleyes provides a robust risk management platform with real-time data on your compliance status. So you’ll rest assured knowing that if an attack occurs, you’ve maintained an acceptable level of risk management to receive coverage for the attack. 

Book a meeting today for a personalized demo showing you how Centraleyes can keep you compliant and protected.

Start Getting Value With
Centraleyes for Free

See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days