Cyber Insurance Checklist: What to Expect When Applying

cyber insurance checklist policy

Cyber Insurance Checklist: Questions to Expect When Applying 

The threat of cyber attacks looms over businesses and leaves them vulnerable to potential financial losses, reputational damage, and operational disruptions. A reminder of the devastating consequences of attacks like this comes with the infamous ransomware incident that targeted the Colonial Pipeline (an American oil pipeline system) on May 7th, 2021. This cyber attack caused a six-day shutdown of their gasoline, diesel, and jet fuel shipments, leading to fuel shortages in various cities, such as Charlotte, Virginia.  

However, despite the massive attack, Colonial Pipeline’s $15 million cyber insurance policy came in handy by helping cover the $4.4 million it paid to the hackers to stop the ransomware attack. This real-world example is a powerful testament to the importance of cyber insurance in protecting your business. 


Who Needs Cyber Insurance? 

The size of your business does not determine your vulnerability to cyber threats. Whether you’re a small coffee shop or a large international shipping company, the reality is that cybercriminals cast a wide net, targeting organizations of all sizes. Any organizations dealing with sensitive information like names, addresses, credit cards, vendors, etc., are at risk. 

The motive behind these attacks can range from financial gain through ransomware to data theft for illegal exploitation. Hackers exploit vulnerabilities in your systems, compromising sensitive information, disrupting operations, and potentially causing irreparable damage to your brand’s reputation. Recognizing that cyber threats can affect any business, regardless of its scale or industry, allows you to take the first step toward protecting your organization. 

The internet has become an integral part of our lives, leading to more accessible communication, transactions, and innovation on a global scale. However, this comes with a price. With the internet operating 24/7, 365 days a year, we can expect to encounter issues at some point. Cybercriminals exploit software, networks, and human behavior vulnerabilities, continuously evolving their tactics to stay one step ahead. The rapid advancement of technology brings convenience and efficiency, but it also exposes organizations to new risks. It’s not a question of “if” a cyber incident will occur; it’s a matter of “when.”  

Data breaches have become alarmingly frequent and costly in recent years, emphasizing the critical need for cybersecurity insurance. According to reports, compromised credentials, such as business email compromises (BEC), contributed to 19% of data breaches in 2022. The financial toll is also concerning as trends show the costs associated with third-party vendor breaches as the initial attack vector increased from $4.33 million in 2021 to $4.55 million in 2022.

These attacks extend beyond financial strain and can impact customer trust, brand reputation, and regulatory compliance. This is where cyber insurance comes in.  If you’re not sure where to start, keep reading to see an informative cyber insurance checklist with common survey questions you may be asked when applying for cyber insurance. 

Cyber Insurance Checklist: What Survey Questions to Expect  

Before you start shopping around for a provider, it’s important to be prepared for the insurance survey questions you’ll be asked. Below is a cyber insurance checklist with commonly-asked questions you can expect.

These questions help insurance companies assess your organization’s cybersecurity readiness and determine the appropriate coverage for your needs. By addressing the questions on this cyber insurance checklist, you can demonstrate your commitment to cybersecurity and enhance your chances of securing comprehensive coverage. 


Is your business continuity plan ready? ☑️

Insurance providers will want to know if your organization has a well-defined and documented business continuity plan. This plan outlines the steps your business will take to continue operations and minimize disruptions in the event of a cyber incident. A robust business continuity plan shows insurance providers that you’re proactive about mitigating risks and are prepared to navigate the aftermath of an attack. 


Are you implementing security awareness training? ☑️

Employees play a critical role in cybersecurity. You may be asked whether your organization provides security awareness training for employees. This training helps educate your team on cybersecurity best practices, such as recognizing phishing attempts, using strong passwords, and being cautious with sharing sensitive information. Security awareness training demonstrates your commitment to building a security-conscious culture within your organization. 


Do you know where your data is being hosted? ☑️

Understanding the location of your data is crucial for assessing potential risks and complying with data protection regulations. Insurance providers may ask about your data hosting practices, including whether you use cloud services or on-site servers. Providing accurate and comprehensive information about your data hosting locations shows insurance providers that your organization is committed to data security and privacy. 


Do you have multifactor authentication? ☑️

Multifactor authentication (MFA) adds an extra layer of security by requiring additional verification beyond a username and password. This security measure helps protect against unauthorized access, reducing the risk of successful cyber attacks. Implementing MFA can enhance your eligibility for comprehensive coverage. 


Have you been hacked before? ☑️

Insurance providers may inquire about any past incidents of cyber attacks or data breaches your organization has experienced. Transparency about previous incidents and the actions taken to address them proves your commitment to learning from past experiences and continuously improving your cybersecurity posture. 


Are your information systems compliant? ☑️

Insurance providers will likely inquire about your organization’s compliance with relevant regulations and industry standards. Compliance with frameworks such as GDPR, HIPAA, or PCI DSS demonstrates your commitment to data protection and helps ensure that your cybersecurity practices align with industry best practices. 


Does your data contain Personal Identifiable Information (PII)? ☑️

PII includes sensitive information such as social security numbers, credit card information, or personal health records. The presence of PII in your data increases the potential risks and the impact of a breach. Being aware of the data you possess and taking appropriate measures to protect it highlights your dedication to safeguarding sensitive information. 


Does your company run penetration tests? ☑️

Insurance providers may ask if your organization conducts regular penetration tests. Penetration testing involves simulated cyber attacks to identify system and network vulnerabilities. Regular testing allows you to proactively identify and address weaknesses, reducing the risk of successful attacks and showing your commitment to ongoing risk assessment and mitigation. 


Do you know who has full admin access to your company’s digital security? ☑️

The management of administrative access privileges within your organization should be tightly supervised. Control over admin access ensures that only authorized individuals have elevated permissions. Implementing strict access controls reduces the risk of unauthorized access or misuse of privileges. 


You can use these questions as a cyber insurance checklist before diving into the process. Addressing these insurance survey questions before selecting a provider will save you time and help you be more prepared to choose a cyber insurance provider and coverage that suits your organization’s needs. 


cyber insurance checklist policy

The Consequences of Being Unprepared 

Applying for cyber insurance without preparing beforehand can lead to significant consequences for your organization, including potential rate inflation. Insurance providers assess the risk level associated with your organization based on various factors such as your cybersecurity measures, incident response capabilities, and risk management strategies. If your organization is considered to be inadequately prepared, insurance providers may increase your premiums to compensate for the higher level of risk they perceive. 

Another consequence of being underprepared is the risk of denial of insurance payout. In the event of a cyber incident, if your organization has not fulfilled the necessary requirements or failed to demonstrate adequate preparation, insurance providers may deny coverage for the damages. This can leave your organization responsible for paying the costs of the incident out-of-pocket, which can be financially devastating and leave you vulnerable in the aftermath of an attack.

If you’re overwhelmed by cyber insurance, and you’re not sure where to start, a simple cyber insurance checklist with commonly-asked survey questions can help you prepare.


A Cyber Insurance Checklist Can Save the Day

Your company’s financial health is tied to its cyber health. The costs associated with cyber incidents can quickly add up, including expenses for incident response, legal fees, data recovery, reputational damage repair, and regulatory fines. Without the safety net of cyber insurance, these costs can significantly burden your organization’s finances and potentially affect its operations. 

The importance of cyber insurance for businesses cannot be overstated. It is an essential component of comprehensive cybersecurity measures, providing financial protection, enhancing trust among stakeholders, and ensuring the long-term viability of your organization.  The cyber insurance checklist above is a great resource to help you if you’re not sure where to begin.

We understand the challenges businesses face in navigating the complex world of cybersecurity. If you’re ready to take the next step in safeguarding your business and navigating the complex world of cyber insurance, don’t wait. Contact us today so we can begin the journey of building a resilient future for your organization.