7 Questions You May Ask About Cyber Insurance

Following the proven processes of a recognized security framework is a significant part of fending off cyber criminals and reducing risk, but what happens if an attack is successful? Does your company have the resources to get back online and recover financially?

This is where cyber insurance steps in.

However, cyber insurance doesn't automatically renew like a service subscription. Companies must review and fill out new cyber insurance forms every year to ensure they still qualify for coverage.

As your cyber insurance renewal date approaches, reviewing your form with your IT provider or internal IT team is essential to ensure it's answered accurately. Otherwise, you may be denied coverage or future claims may be rejected.

1. Why does cyber insurance matter?

A cyberattack can cost not just tens of thousands but millions of dollars.

2021 saw incredible increases in the costs of cyber-attacks.?The cost of remediating a single ransomware attack in the United States was $1.82 million in 2023 . And the price of these attacks is expected to rise.

Cyber insurance can provide aid beyond the financial.

In the face of an attack, cyber insurance can:

• Help cover the costs of the attack.
• Provide emergency contacts and planning to help get companies back online as quickly as possible for minimal losses.
• Assist in ransomware negotiations.
• Alert you if paying the ransomware fee is legal and help find solutions. Sometimes, countries sanctioned by the U.S. perform ransomware attacks, and paying these fees is considered a?violation of OFAC regulations .
• Provide reimbursement for social engineering cyber-attacks.
• Help your organization stay in business after an attack.

2. Why does my cyber insurance form matter?

Your cyber insurance renewal form isn’t just a membership application. Your answers affect your insurance coverage.

How you fill out your form can determine:

• Whether or not you receive coverage.
• Your insurance premium.
• Whether or not your claims are accepted.

Your coverage will be denied if you do not follow good IT security practices according to the renewal form’s requirements.

If you are attacked, your cyber insurance provider will run a security audit to ensure you follow the IT security practices you agreed to from the form. Your claim will be denied if the audit reveals that you were not.

On the other hand, if you closely follow a cybersecurity framework reflected in your renewal form, you may be pleasantly surprised with a discounted premium.

3. Why do cyber insurance application forms change?

As cyberattacks evolve, so do cyber insurance policies. Cyber insurance forms focus on cybersecurity practices outlined by the?CIS and NIST security frameworks , which closely follow the changing IT security landscape.

Cyber insurance providers are becoming more educated about cyberattacks and IT security practices. As such, their forms are moving from more generic to precise questions about specific tools used and practices followed.

These focused questions remove “gray areas” or the opportunity for misunderstandings. The goal is to provide a clear framework for coverage conditions.

For example, an older form may have asked, “Do you have IT backups?”

It does not specify what kind of backups are required or where they are stored. A business could argue that “a backup” could mean a simple USB with copied files instead of a true data backup system .

Newer cyber insurance applications may ask instead, “Do you have an off-site backup replication taking place?”

This is a specific kind of backup at a particular location (off-site). It cannot be confused or misinterpreted. A business either meets this qualification or does not.

4. How do I fill out the form correctly?

Many cyber insurance forms will have two main sections:

1. Business practices
2. Technology and IT security practices

The first section can be filled out by business leadership as they know their business and practices best. IT providers refrain from providing input in this area as it falls outside their expertise.

However, the second section on IT will require collaboration with your IT provider or internal IT team. In fact, this section may even specify, “Your IT provider or IT team should address the following questions.”

This section of the renewal form addresses specific IT security measures and tools in place, requiring a deep understanding of the organization's IT infrastructure. If these questions are answered incorrectly or dishonestly, it could result in a rejected application or claim.

5. How can my IT provider or team help with the cyber insurance form?

Brings an Understanding of IT Security Tools

The IT provider or internal IT team can help you accurately answer questions about IT security tools, including alternative tools.

Cyber insurance providers may ask about brand name tools. In some cases, this specific tool may be preferred by your provider. However, in some cases, it’s not the brand of the tool that matters but its effectiveness and goal.

If the form asks for a brand name tool, your IT provider can tell you whether or not you use it or its alternative and why.

For example, a form may ask, “Do you use Proofpoint?”

A general user may wonder what Proofpoint is, what it does, and if they need to purchase it immediately.

However, your IT specialist may say, “Proofpoint is an email protection application. We don’t use Proofpoint, but we use a similar tool to accomplish the same goal.”

This knowledge prevents the user from trying to buy a superfluous application and allows them to answer the cyber insurance form accurately. They may not use the brand specified, but they use an equivalent that accomplishes the same security goal.

Answers Questions About IT Practices Accurately

IT providers and internal IT teams bring an understanding of IT security frameworks and practices. They can interpret the form questions to help clients answer honestly and accurately.

Audits Existing Security Practices

In addition, reviewing the form with clients allows IT providers or teams to audit the existing security practices against the recommendations of the cyber insurance form.

This involves a detailed discussion of existing tools, practices, and their strategic relevance in the broader IT roadmap . Any gaps or areas for improvement can be identified and addressed during this audit.

It allows both parties to ensure their security practices are relevant and effective.

If the form is reviewed early enough, it also gives the organization time to implement new practices before the renewal deadline.

6. What if I Feel My IT Provider Can’t Help Me?

If doubts arise about your IT provider's ability to complete the form accurately, businesses may consider validation from a third-party security expert. This additional layer of verification ensures that the information aligns with your organization's cybersecurity practices.

However, a quality IT provider can either complete the form without issue because they understand your system and practices, or they will have already recommended an IT security provider who can. ?

7. When should I review my renewal form?

You should begin reviewing your form 90 days before your official renewal date.

For example, if you signed up for your policy in April 2023, you should review the renewal form in January 2024.

The 90-day timeframe allows ample room for a thorough review of the form and how your current IT security tools and practices compare. You can address any changes in cyber insurance requirements and your IT system during this time.

Next Steps for Applying For or Renewing Your Cyber Insurance Form

To reduce their own risk, cyber insurance companies look for clients who closely follow security framework guidelines.

If a company answers the form dishonestly and then files a claim, an auditor will discover that the promised protocols were not followed. As a result, the claim will be denied.

Talk to your IT provider or internal IT team when you're looking for cyber insurance. Your IT expert may have recommendations for a cyber insurance provider, and it can help you review and answer the application questionnaire.

If your IT provider or team cannot answer application or renewal form questions or work toward a resolution, it might be time to consider a new?IT partnership .

Before applying for cyber insurance renewal, review your existing policy. Ensure you know the renewal date and can review the renewal requirements with your IT provider or internal IT team 90 days before the deadline.