Why Do Cyber Insurance Claims Get Denied?

Why cyberinsurance clamins get denied

As cyberinsurance coverage becomes more common, VTC Tech has noticed some common reasons why your company’s cyberinsurance claim may be denied by the insurance company in the event your business suffers a cyber attack.

Cyber insurance is an insurance product that aims to shield businesses against financial losses and liabilities arising from cyber-related threats and incidents.

Protecting your business from cyberthreats often entails getting cyber insurance coverage. Read about why cyberinsurance is important for your business.

 

Why your cyber insurance claim may be rejected:

Simply having a cyber insurance policy may not be enough to shield your business from potential financial losses resulting from cyber incidents.

Many cyberinsurance claims are rejected due to various reasons, including “failure to maintain” adequate cybersecurity measures. So, what can you do to ensure that your cyber insurance claim isn’t denied? The answer lies in partnering with a reputable managed IT services provider.

Here are some reasons cyber insurance claims can get rejected:

Failure to Maintain Security Measures:

Failure to maintain adequate cybersecurity measures is a common reason for claim rejection.

Insurers expect policyholders to adhere to certain security standards and protocols, such as regularly updating software, implementing strong passwords, employing encryption methods, and conducting regular security audits. If a breach occurs due to negligence in maintaining these measures, the claim might be denied.

  • VTC Tech can regularly assess and update cybersecurity measures, ensuring that systems are patched, firewalls are properly configured, and antivirus software is up to date.
  • We can implement robust security policies and procedures, such as regular password changes, access controls, and encryption protocols.
  • VTC Tech can conduct security awareness training for your employees to educate them about phishing scams, social engineering tactics, and other cybersecurity best practices, reducing the risk of human error.

Exclusionary Clauses:
Policies often contain exclusionary clauses specifying situations or circumstances in which coverage will not be provided. Common exclusions may include acts of war, intentional misconduct, fraudulent activities, or pre-existing vulnerabilities. If the claim falls within one of these excluded categories, it may be rejected.

Incomplete or Inaccurate Information:
Failing to provide complete and accurate information during the claims process can lead to rejection. This includes inaccuracies in incident reporting, failure to disclose previous breaches, or omitting relevant details about the security posture of the organization.

Lack of Proof or Documentation: Insurers typically require evidence to support the claim, such as forensic reports, incident response logs, and documentation of financial losses. If the policyholder fails to provide sufficient proof of the incident or its impact, the claim may be denied.

cyberinsurance policy claims getting denied
Cyberinsurance is becoming more important for businesses everyday.
VTC Tech can help your company maintaing adequate cybersecurity policies so any claim you make does not get denied.


Late Reporting
:
Timely reporting of cybersecurity incidents is crucial for claim approval. Many policies have strict notification deadlines, and failure to report within the specified timeframe can result in claim denial.


Policy Expiration or Lapses in Coverage
:
If the policy has expired or if there were lapses in coverage due to non-payment of premiums or other reasons, any claims filed during the period of lapsed coverage may be rejected.


Misrepresentation or Fraud
: Providing false information or intentionally misrepresenting facts to obtain coverage can lead to claim denial and potential legal consequences.


Non-Compliance with Policy Terms
: Policyholders must comply with the terms and conditions outlined in the insurance policy. Failure to adhere to these terms, such as failing to notify the insurer of material changes in the business, can result in claim rejection.

It’s important for organizations to carefully review their cyber insurance policies, understand the terms and conditions, and take proactive steps to mitigate cyber risks to minimize the likelihood of claim rejection.

Contact VTC Tech for help with cyberinsurance coverage for your company including ongoing IT support in order to  maintain your cybersinsurance policy requirements.

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