Cyber Risk Insurance Coverage Requirements

This question asks whether your company has purchased cyber insurance - a special type of business insurance that helps cover costs when things go wrong with technology and data security. Just like you have insurance for your office or vehicles, cyber insurance protects your business financially if hackers steal data, your systems go down unexpectedly, or you face lawsuits from a security breach. Your potential customers want to know you won't go out of business if something bad happens, and that you can afford to properly handle and recover from security incidents.

Having cyber insurance demonstrates financial responsibility and risk management maturity to enterprise customers. Without it, a single security incident could bankrupt your company, leaving customers stranded without support or recourse. Insurance coverage directly impacts your ability to win enterprise deals - many procurement teams now require proof of cyber insurance before signing contracts. It also ensures you can afford proper incident response, legal counsel, and customer notification if a breach occurs, protecting both your business and your customers' interests.

The biggest mistake is assuming general business liability insurance covers cyber incidents - it typically doesn't. Many companies also underestimate coverage needs, buying minimal policies that won't cover actual incident costs. Another pitfall is not reading policy exclusions carefully; some policies exclude common scenarios like employee errors or third-party vendor breaches, leaving dangerous gaps in coverage.