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Underwriting and understanding cyber liability claims can be both complex and confusing for policyholders. Clients who have little understanding of their cyber policy can have trouble getting claims approved which can lead to the company bearing all the risks when recovering from a data breach. By understanding what often leads to the denial of a cyber claim, agents and brokers can work with policyholders to make sure their claims are successfully resolved. Here are four reasons why cyber claims are often denied:

  • Late or improper notification: “Unless the policy has specific language that allows claims for a period of time after the policy ends (usually limited to just a few months at most), then notification during the policy period is key to getting these claims approved.”
  • Lack of understanding on coverages: Cyber liability policies often differ depending on a variety of risk factors. Policyholders must understand their own responsibilities when it comes to protecting their data.
  • Exclusions within the contract language: A claim that occurred while sharing data with third party vendors may not always be covered because they fall outside the scope of the policyholder’s plan. Be sure to choose a plan that will cover all your organization’s risks.
  • Not involving the carrier early enough: “Producers and policyholders have a great resource available to them in the form of the carrier, and when in doubt, claims — even those involving questions or uncertainty — should be reported as quickly as possible. This allows the carrier to investigate and determine if there is any exposure.”

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