Qualify for Cyber Liability Insurance with Confidence
Aug. 6, 2025
No business with internet-connected devices can eliminate the threat of cyberattacks. Instead, the focus must shift to managing this risk effectively. Two strategies dominate the landscape: treatment through robust cyber defenses and transfer via cyber insurance. These approaches are not mutually exclusive. They complement each other to form a balanced cyber risk management program.
The Interplay Between Cyber Insurance and Cyber Defenses
Cyber insurance has emerged as a critical pillar in cyber risk mitigation strategies. It acts as both a carrot and a stick for companies to elevate their cybersecurity posture. Insurers often set minimum security requirements, such as multi-factor authentication (MFA), to qualify for coverage. This "stick" forces companies to invest in stronger defenses. On the other hand, insurers reward robust cybersecurity measures with lower premiums, higher policy limits, and better terms—the "carrot."
It's worth emphasizing that without demonstrating adequate cyber hygiene, obtaining cyber insurance is increasingly difficult. Insurers are becoming more selective about which clients they accept, with rigorous assessments of security controls now standard practice. Businesses that cannot demonstrate basic security measures like regular patching, endpoint protection, and secure authentication may find themselves either denied coverage entirely or facing prohibitively high premiums.
Investing in cyber defenses not only optimizes insurance positions but also delivers broader benefits, such as improved protection, fewer alerts, and freeing up IT resources. Firms that adopt a holistic approach to cyber risk management can reduce their total cost of ownership (TCO) while minimizing the likelihood of experiencing a major incident.
What is Cyber Insurance and Why Does It Matter?
Cyber insurance is a policy designed to help businesses recover from digital threats like data breaches and ransomware attacks. It can cover the cost of cleanup when systems are compromised and reputations are on the line. Cyberattacks rarely come with a warning, and when they hit, the damage can be fast and costly. From data recovery to managing the fallout, a single breach can derail operations for days, weeks, or months.
Depending on the policy, cyber insurance may cover:
- Data recovery: Costs to restore systems and recover lost data
- Legal expenses: Attorney fees and regulatory fines
- Notification services: Customer notification and credit monitoring
- Business interruption: Lost revenue during downtime
- Ransom payments: Coverage for extortion payments (in some policies)
While cyber insurance is a smart investment, getting insured is only the first step. What you do afterward, like maintaining strong cyber hygiene, can determine whether your claim holds up when you need it most.
Policy Coverage and Challenges
Despite widespread adoption, many companies remain uncertain about what their cyber insurance policies cover. For example, many businesses are unsure whether their policies cover ransom payments or income loss due to attacks.
This lack of clarity can lead to misaligned expectations and insufficient coverage during critical incidents. To avoid surprises, enterprises should involve all stakeholders in policy decisions and ensure alignment with business needs.
A critical yet often overlooked aspect of cyber insurance is the application process itself. Insurers can legally deny claims if they discover material misrepresentations in the original application. Companies that exaggerate their security controls, fail to disclose known vulnerabilities, or provide inaccurate information about their IT environment may find their claims denied when they need coverage most. The application serves as the foundation of the insurance contract, and transparency is essential for claim validity. For this reason, many firms now involve both legal counsel and security teams in completing cyber insurance applications to ensure accuracy.
The Impact of Cyber Defense Investments
Most businesses that purchase cyber insurance also invest in improving their defenses to optimize their insurance position. These investments have tangible benefits:
- Qualifying for coverage that would otherwise be inaccessible
- Securing better-priced coverage
- Obtaining improved policy conditions
These investments deliver broader organizational benefits, such as enhanced protection and operational efficiency.
Ransomware Landscape in 2025
Ransomware remains one of the most significant cyber threats, with attacks seeing alarming growth. According to Check Point Research, ransomware attacks increased by 126% in Q1 2025 compared to Q1 2024. North America accounted for 62% of all global ransomware incidents, with the consumer goods and services sector being the most targeted (13.2% of reported attacks).
Companies with cyber insurance report lower ransom payment amounts and better recovery outcomes. However, data from Veeam's 2025 ransomware report indicates positive shifts in payment trends, with 27% of firms reporting they did not pay any ransom.
Takeaways for Cyber Risk Management
- Integrate cyber defenses and insurance to reduce TCO and improve resilience
- Strong cybersecurity measures unlock insurance savings and reduce attack likelihood
- Ensure complete accuracy when applying for cyber insurance to avoid denied claims
- Continuously uphold the security measures specified in your policy to maintain valid coverage
- Ensure all stakeholders understand what the policy covers and address any gaps
- With recovery costs remaining high, organizations must ensure their policies provide adequate coverage for major incidents
How to Strengthen Your Cyber Insurance Readiness
To avoid costly claim denials and strengthen your overall security posture, your business must match the expectations of your insurer. This means implementing the safeguards that many underwriters now require as standard:
- Implement cybersecurity fundamentals: Ensure multi-factor authentication (MFA), comprehensive backup systems, and endpoint protection are deployed across your environment
- Document your incident response: Develop, test, and maintain a formal incident response plan that defines roles and procedures
- Stay current with patches: Establish a routine patching program to address vulnerabilities promptly
- Train employees continuously: Conduct regular security awareness training with simulated phishing exercises
- Perform regular assessments: Schedule periodic risk assessments to identify and remediate emerging vulnerabilities
Working with the right IT partner can make all the difference in maintaining these practices and ensuring your corporation remains insurable in today's challenging cyber landscape. STACK Cybersecurity will not accept clients who don't have cyber liability insurance. We assist our clients with the entire process, from becoming insurable to completing their cyber insurance application. We evaluate policy limits and many additional factors to help our clients get the best and most appropriate coverage at the best rate.
Working with a knowledgeable IT partner like STACK Cybersecurity can turn your technology strategy into an asset that not only protects your business but also strengthens your insurance position.
Need Help Optimizing Your Cyber Insurance and Defense Strategy?
Let's talk about how we can help you build a comprehensive cyber risk management program that satisfies insurers and protects your business. Contact Us to schedule a consultation.