Think Your Cyber Insurance Will Save You? Think Again.
Imagine your company just got hit with a ransomware attack. Files are locked, operations are at a standstill, and the clock is ticking. But you’ve got cyber insurance, right? No sweat. So, you call your provider fully expecting that they’ll swoop in and save the day.
But they don’t.
Instead, they hit you with it: “We need evidence.” Evidence? Yes, evidence. They need proof that you’ve been following best practices. Proof of patching. Logs of security controls. Documentation of everything you said you’d do to prevent this exact scenario.
What happens if you can’t produce it? Spoiler alert: It won’t be a happy ending. Your claim might get denied.
Documentation Matters More Than Ever
Cyber insurance isn’t a magic wand. Providers aren’t in the business of paying claims. That means the burden is on you to prove your company did its part.
Here’s what they’re looking for:
- Policies and Procedures: Do you have documented security policies in place? Are they enforced?
- Evidence of Compliance: Can you show you’ve met regulatory requirements (e.g., GDPR, HIPAA, etc.)?
- Risk Acceptance: Did you knowingly leave gaps, and did you document those decisions?
- Incident Response Plans: Was there a plan in place, and can you show how you executed it?
Without this documentation, your insurance provider has a perfect excuse to deny your claim. And that leaves your company holding the bag—financially, operationally, and reputationally.
The "We’re Covered" Myth
A lot of businesses think cyber insurance is a safety net. But it’s not a get-out-of-jail-free card. It’s more like a legal deal. The more evidence you can provide, the better your outcome.
Take this real-world scenario:
A company was hit with ransomware, and the damage totaled millions. They submitted a claim, only to have the insurance provider reject it because they couldn’t produce documentation showing regular patching and vulnerability scans. The kicker? They thought their IT provider “had it covered.”
Sound familiar? If you don’t have proper documentation, your insurance provider isn’t going to bail you out. They’re going to bail on you.
Why You Should Care
You might be thinking, “This sounds like IT’s problem.” But it’s not just about firewalls and patches. This is about your business, your liability, and your ability to recover from an attack.
Here’s what’s at stake:
- Financial Impact: If your insurance doesn’t pay out, how will you cover the costs?
- Reputation: Clients and partners expect you to have your act together. A denied claim screams negligence.
- Legal Exposure: If stakeholders or regulators get involved, you need proof you did everything you could.
The best leaders aren’t just delegating security. They’re demanding visibility and accountability. If your IT team can’t show you documentation, that’s a red flag.
The 3 Most Common Documentation Gaps
Most businesses get caught off guard because they don’t realize what they’re missing. Here are the top three gaps that lead to denied claims:
- No Risk Assessments: If you can’t show you’ve evaluated vulnerabilities, insurers will argue you didn’t take prevention seriously.
- Incomplete Incident Response Plans: A vague “we’ll figure it out” approach doesn’t cut it. You need a step-by-step plan that’s tested and documented.
- Missing Logs and Reports: Insurers want proof of what you’ve done—patching, updates, monitoring. No logs? No payout.
How to Avoid a Cyber Insurance Nightmare
The good news? This is 100% preventable. Here’s how you can make sure your cyber insurance works when you need it:
- Audit Your Documentation: Regularly review your policies, logs, and plans to ensure they’re complete and up-to-date.
- Work with Your IT Provider: Make sure they’re not just handling security but also documenting everything they do.
- Test Your Incident Response Plan: Run drills and keep records of how your team executes.
- Get Risk Acceptance in Writing: If your company decides to accept certain risks (e.g., not upgrading an outdated system), document it.
Documentation isn’t just an IT task—it’s a business strategy. The more prepared you are, the less chance your insurance company has to wiggle out of paying.
The Bottom Line
Cyber insurance is only as good as the documentation behind it. Without proof that you’ve done your part, your policy might not be worth the paper it’s printed on.
Don’t let a lack of documentation turn a cyberattack into a business-ending event. Right now you need to be asking yourself this question: If your provider called right now and asked for evidence, could you deliver? If the answer is anything other than a solid YES, it’s time to take action.
Remember: Cyber insurance isn’t about trust. It’s about proof. And in this game, documentation is everything.
