Purchasing and understanding cyber insurance coverage

Abstract

As the numbers of cyberattacks and cyber mishaps continue to increase, more and more companies are looking to transfer some of their cyber risks through insurance. Despite this increase in cyber insurance uptake, questions abound as to what cyber insurance covers and how to select the most appropriate coverages. In addition, many companies are unaware of the various conditions and requirements typically contained in cyber policies, and how those provisions can affect their ability to secure coverage under the policy following an otherwise covered event. This paper provides an overview of cyber insurance, describes the types of information often requested by underwriters in connection with applications for the purchase of cyber insurance, and discusses how to negotiate for and select a policy that adequately addresses the insured company’s unique cyber risk profile. The paper also highlights various conditions and requirements embedded in most cyber forms and outlines how insureds can avoid inadvertent missteps in connection with those policy provisions that might jeopardise coverage in the event of a claim.