Cyber Insurance: What Should I Consider Before Signing Up?

Risk transfer is a strategy that consists of enabling the reduction of the impact of a given risk. In terms of cybersecurity, transfer through cyber insurance is a key option given the constant evolution of threats and the risk of impact associated with cyber incidents. The path to deciding to contract cyber insurance involves having mature controls, as well as clarity on the scope and limits of coverage. 

Eligibility and Cyber Resilience

Insurance companies seek customers who ideally their prospects and clients can demonstrate cyber resilience, not just technical cybersecurity. The common aspects that insurers evaluate to determine eligibility and negotiate the cost of the policy and the premium focus on the administrative and technical control capabilities that the organization demonstrates:

Human Resources

• Adequate training and awareness for employees.

Access Control and Identity Management

• Proper management of privileged user accounts.
• Proper segregation of privileges to protect key accounts.
• Multi-factor authentication to secure remote and privileged access.

Digital Hygiene

• Secure configuration of electronic devices.
• Properly tested data backups.
• Regular implementation of updates and patches.

Operations Security and Incident Response

• Data protection (at rest and in transit).
• Protection against malicious code.
• Security incident monitoring and response.
• Incident response planning and periodic testing.
• Historical record of major security incidents.

Scope and Limits of Cyber Insurance

For organizations that are in the process of defining what to cover, it is important to know what the common coverage scope is, as well as what risks are not usually covered by cyber insurance.

What to consider in the coverage?

First-party coverage: Covers direct losses incurred by the organization (e.g., data breach response costs, business interruption, data recovery expenses, public relations efforts).

Third-party coverage: Covers liabilities arising from claims filed by affected parties (e.g., legal costs, regulatory fines, expenses for notifying affected customers).

Additional coverage options: Extensions based on specific needs for losses arising from reputational damage, social engineering fraud, or cyber extortion.

Exclusions and limitations: The policy may not cover all potential circumstances. It is important to review and clearly understand what a policy covers and excludes.

What does cyber insurance not cover?

• Losses and damages resulting from illegal or unfair business practices committed by the insured or by third parties (e.g., suppliers or partners) working with the organization.
• Loss of intellectual property (e.g., source code, product designs).
• Losses and damages due to data protection failures.
• Costs of software updates and hardware replacement.
• Costs to improve the organization’s cybersecurity.
• Costs related to breach of contractual responsibilities, or fines arising from breach of consumer protection laws.
• Costs related to fines from law enforcement, regulators, and breaches for non-compliance.
• Losses and damages due to acts of foreign governments (e.g., acts of war). 
• Losses and damages due to online defamation through social media.

Showing Cyber Resilience

The path to demonstrate cyber resilience and contract cyber insurance can be complex and lengthy. That is why it is essential for organizations to have agile technological tools focused on Asset Management and Compliance, which offer real visibility of their current posture and its evolution.

In this regard, Batuta has incorporated smart improvements that make it easier to maintain an up-to-date inventory of assets, control software, patches, and compliance. These include an optimized security posture scoring system that prioritizes risks and clearly identifies which devices require immediate attention, helping you make quick and informed decisions.

And this matters because, if you are in the process of applying for cyber insurance—or simply want to strengthen your response capabilities—having a platform that demonstrates evidence, reduces risks, and speeds up audits can mean the difference between moving forward smoothly or getting stuck in the process. Batuta gives you the visibility and traceability that insurers need to see… and that your organization needs to better protect itself.