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Cyber insurance, necessity, not luxury

By February 6, 2023March 18th, 2024No Comments
Cyber Insurance, Necessity, Not Luxury - Group of Business People Looking Over Documents

Will Your Cybersecurity Stack Up to an Insurance Application?

The proliferation of data crimes has pushed cybersecurity into the risk management mainstream. If you don’t have a plan in place, it can affect your coverage options.

Before issuing a cyber liability policy, insurance companies will request information to assess your vulnerability and threat levels, such as:

Data sharing, collection and storage
Cybersecurity strategy
Cyber incident response plan

If you have a high vulnerability for a cyberattack, you’re at increased risk for a data breach and subsequent insurance claim. A data breach can be catastrophic if you don’t have a robust cybersecurity and incident response plan. These factors determine if an insurance company will offer you a cyber liability policy (and at what cost) or deny it.

Gather your IT team and evaluate your systems and protocols before you apply.

Cyber liability insurance application
Here are some questions you might see:

Claims history

Have you had any known cyberattacks or network-related interruption claims?
Has anyone sued you for personally identifiable information (PII) data loss or intellectual property infringement?

PII data storage

How many individuals’ PII do you collect, store, process or handle? (This includes paper data files, too.)
Do you require clients to store PII, like credit cards and Social Security numbers?
Do you collect or store biometric data (fingerprints, facial recognition, iris scans)?
Can you allow clients to opt out of sharing nonessential PII with third-party vendors?
Is your sensitive data encrypted?
Do you rely on a third party to store or process nonpublic PII on your behalf?


Have you designated an individual or group responsible for information security?
Do you have a designated individual or group responsible for compliance and regulation issues? Is it independently audited or reviewed by an attorney?
Do you use layers of security technology such as firewalls, antiviral software, strong passwords and multifactor authentication?
Do you back up mission-critical business data regularly?
Are mission-critical logs reviewed for suspicious activity on a scheduled or real-time basis?
Do you store recent backups offline or solely in the cloud?
Do you have a document destruction and retention policy?
Do you isolate your backup data to minimize threats to operational processes?
Do you implement system security updates or patches? How often?
Do you have a process for managing open accounts, including removing access for former employees, clients and vendors?
What network security do you impose on remote workers?

Cryptocurrency and mining

Does your business engage in cryptocurrency operations like initial coin offerings, mining, trading, storage and exchanges?
Does your business accept or process transactions using cryptocurrency tokens or digital coins?

Incident response planning

Do you have a written cyber incident response plan?
Do you have a business interruption plan that includes alternate operations while recovering from a cyberattack?

Employees, vendors and contractors

Do you have written contracts to enforce your information security with third-party service providers?
Do you audit your third-party vendors and suppliers to ensure their cybersecurity protocols and protections are adequate?
Are you using the least privileged access to data for all employees and third parties?
Do you have an asset management inventory to track your computers and devices?
Do you perform background checks for all employees, vendors and contractors?
Do you train employees on cybersecurity?
Do you have a formal procedure or hotline for reporting suspected cyber incidents or suspicious behaviors (internal or external)?

Be truthful about your cybersecurity to avoid future denials
When you apply for a cyber liability policy, don’t embellish your security protocols or downplay your data to get favorable rates.

If you say you have a security team, perform weekly system updates or use multifactor authentication, follow through. If you don’t, you risk a claim denial based on false statements on your application.

Get started on cybersecurity
The questions on a cyber liability application can be overwhelming, but they can also offer a helpful road map for assessing your data vulnerabilities. Reducing your cyber risks now could help lower your policy premiums in the future.

Speak with an experienced Trusted Choice® independent insurance agency today for more information on cyber coverage options for your business. A trusted insurance agent can be your best resource. V.F. McNeil Insurance is a Trusted Choice® independent insurance agency located in Branford, Connecticut.

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