Cyber insurance used to feel like a safety net: pay the premium, file a claim if something happens, and get help covering the damage. In 2026, that assumption is risky.
Here's why: cyber incidents are still happening at scale, and insurers have become far more strict about what they'll cover, how they'll cover it, and what you must prove you had in place before the incident. The result isn't that cyber insurance is "bad", it's that many businesses discover too late that their policy is conditional.
Just look at the trend line: the NAIC's 2025 Cybersecurity Insurance Report notes that in the U.S. market, the number of cyber insurance claims rose almost 40% with nearly 50,000 reported in 2024.
With more claims comes more scrutiny, especially around whether required controls were actually implemented and maintained.
Below are the most common, compliance-driven reasons a cyber insurance claim can be reduced, delayed, or denied and what "insurance-ready security" looks like going into 2026.
1. Your application answers become part of the claim investigation
Most cyber insurance applications ask about a short list of controls: MFA, backups, endpoint protection, patching, privileged access, security awareness training, and incident response planning. Many organizations answer based on intention ("we're rolling it out") instead of reality ("it's fully enforced everywhere that matters").
In a claim, the insurer (and their forensic partners) may validate those answers against logs, configurations, and identity settings. If the insurer concludes that key answers were inaccurate, or that the business failed to maintain the stated controls, coverage can be challenged.
Insurance-ready move: treat the application like an audit. If you can't prove it with a report, screenshot, policy, or configuration export, don't claim it's done.
2. "Required security controls" are no longer suggestions, they're conditions
Many carriers now underwrite based on baseline controls and may expect you to keep them in place continuously, not just at renewal time. Large cyber insurers and brokers have been very clear that underwriters look favorably on (and increasingly expect) stronger controls as part of a program. Marsh notes ongoing underwriting attention to cybersecurity controls in market updates.
While exact requirements vary by carrier and industry, common examples include:
- MFA on remote access, email, privileged accounts, and critical systems
- EDR/XDR (not just traditional antivirus) across endpoints with active monitoring
- Backups that are protected from ransomware and regularly tested for restore
- Patch and vulnerability management with defined timelines
- Documented incident response procedures and contacts
Coalition (a cyber insurer) publicly lists security requirements like MFA, backups, training, and identity/access management as core expectations for coverage.
Insurance-ready move: implement controls and document enforcement (policies, logs, device coverage reports, backup test results).
3. "This isn't covered" is often hiding in sublimits and carve-outs
A policy can say "$1,000,000 limit" and still have painful sublimits or exclusions in the exact area you need most. Two big examples:
Social engineering / funds transfer fraud (FTF)
A lot of businesses assume a wire-fraud event triggered by email compromise is fully covered. In practice, many policies handle it under separate terms, separate limits, and strict verification requirements.
Coalition's 2025 Cyber Claims reporting highlights how business email compromise remains costly and how a significant portion of BEC events can involve funds transfer fraud.
Business interruption and restoration
Even when covered, payouts can depend on documented downtime, restoration timelines, and proof of resilience controls (like tested backups). If backups exist but haven't been tested, or were reachable and encrypted during the attack, expect hard questions.
Insurance-ready move: read the declarations and the endorsements. Know your sublimits, waiting periods, and exclusions before you need them.
4. You didn't follow the policy's incident-response "rules of the road"
Many cyber policies include requirements that can trip up a stressed team in the first 24--72 hours:
- Prompt notice to the insurer (sometimes very fast after discovery)
- Using insurer-approved breach counsel or incident response vendors (or getting consent first)
- Preserving evidence and logs
- Coordinating communications to customers, regulators, and media through approved channels
None of that is "red tape" during a ransomware event, it's how insurers manage exposure and fraud risk. But if your internal team doesn't know the steps, it's easy to violate conditions unintentionally.
Insurance-ready move: build an incident response plan that includes your insurer's reporting instructions, contact list, and vendor panel requirements.
5. You can't demonstrate a recognized security program (governance matters now)
The security conversation in 2026 is less about "do you have antivirus?" and more about risk governance and measurable outcomes.
A practical way to get there is aligning to a recognized framework. The NIST Cybersecurity Framework (CSF) 2.0 is designed to help organizations of all sizes manage and reduce cybersecurity risk, including governance and continuous improvement.
Insurers don't require "NIST certification," but they do reward organizations that can demonstrate mature, repeatable controls: asset management, access control, monitoring, incident response, recovery planning, and vendor risk oversight.
Insurance-ready move: map your controls to a framework (like NIST CSF 2.0) so you can show structure, not just tools.
What "Insurance-Ready" Security Looks Like in 2026
If you want a claim to stand up under pressure, you need two things:
- Controls that materially reduce risk (MFA, EDR, backups, patching, least privilege, monitoring)
- Evidence that proves they were in place and enforced (reports, configs, policies, tests, logs)
That's the difference between "we thought we were covered" and "we can defend our claim."
Book a TotalBC Cybersecurity Assessment
Cyber insurance should be the last layer of protection, not your plan. TotalBC helps businesses build compliance-driven security controls, document them, and get "underwriter-ready" before renewal or before an incident puts your coverage to the test.
Schedule a TotalBC Cybersecurity assessment to review your current controls, gaps that commonly trigger claim disputes, and a clear plan to become insurable and defensible.
Call 866-673-8682 or visit www.totalbc.com to get started.
