The Hidden Cost of Cyber Gaps: How Insurers Are Rewriting the Rules

For years, cyber insurance has been seen as a safety net—buy a policy, and if something goes wrong, you’re covered. But that mindset is dangerously outdated.

Today, insurers aren’t just reviewing your claim after an incident. They’re scrutinizing your security posture before they bind the policy—and if your safeguards don’t meet their expectations, the outcome is predictable:
❌ Coverage denied
🔒 Claims unpaid
📉 Premiums skyrocketing

The rules have changed—and most businesses haven’t caught up.

From Protection to Prevention: The Shift in Cyber Insurance

Insurers used to write cyber policies based on industry averages and good faith. That’s over.

Now, insurance underwriters are acting more like risk auditors. They're asking:

• Do you have MFA on all critical systems?

• Are your backups segmented and tested?

• Do you conduct regular security awareness training?

• Is there a documented incident response plan?

Even if you can answer “yes” today, you’ll need evidence to prove it—before a breach and during a claim.

The Real Cost of “Almost Compliant”

Most businesses have some security measures in place—but gaps in coverage or documentation can be dealbreakers.

• Missing endpoint detection? Expect exclusions.

• Outdated firewall rules? Expect higher premiums.

• No vendor risk management plan? Expect questions—or rejections.

And here’s the kicker: you often won’t know what you’re missing until your renewal is denied or a claim is rejected.

Insurers Are Passing the Risk Back to You

Cyber insurers are increasingly shifting the burden of due diligence back onto the policyholder. That means:

• Policies with co-insurance clauses (you pay a percentage of the loss)

• Sublimits that cap payouts for specific attack types

• Exclusions for incidents caused by third parties you didn’t vet

You may think you're covered—until you read the fine print.

How Bawn Helps You Stay Ahead

At Bawn, we help clients close the gaps before insurers penalize them. Our Cyber Liability Assessment gives you a clear view of:

• What insurers expect based on your industry and size

• Where your current controls fall short

• How to build defensible documentation to protect your claim

• What to ask for in your next policy renewal

We’ve helped clients avoid non-renewals, challenge denied claims, and lock in better pricing—all by showing that security is being taken seriously.

Don’t Let a Paper Policy Give You False Confidence

If you haven’t reviewed your cyber insurance terms lately—or mapped your security controls to insurer expectations—it’s time. You may have more exposure than you think.

👉 Schedule a Cyber Liability Readiness Check