Ask These Questions Before You Need Your Cyber Insurance

What Does Cyber Insurance Cover?

Of the organizations who have cyber insurance, it’s likely that few can confidently tell you what their policy actually pays for (or how) if something happened tomorrow.

That gap, between having a policy and understanding it, is one of the most consistent patterns we see. By no means is it because that business is careless, though. It’s that a cyber policy reads like a legal contract (because it is one), and most people reasonably assume their agent has already worked out the details on their behalf.

We recently sat down with Travis Kroger, cyber insurance practice lead at UKON, for our podcast, and he walked through a few of the places where that assumption breaks down.

Two of those assumptions are worth understanding well before you’re in the middle of an incident.

 Two Assumptions Worth Double-Checking

1. The Clause That Decides Who Pays First

Here’s a distinction most people never think to check: whether your policy pays vendors on your behalf or reimburses you after you’ve already paid.

Picture a ransom scenario. Systems are locked, and your legal counsel and a forensics team may require a confirmation of payment before substantial work begins.

With a policy that pays on your behalf, your insurer’s incident manager handles that directly: they assign a lawyer, a forensics firm, and pay them, so you’re not scrambling for cash while your business is down.

With an indemnify-or-reimburse policy, you pay first. If the ransom itself runs into six figures and your organization doesn’t have a way to quickly access that much money, you’re the one figuring out how to get it, before you ever see reimbursement.

Two policies can carry the same limit, the same deductible, and even the same premium, and still put you in a completely different position on the day it matters.

*Ask your broker to identify the applicable wording and confirm with the carrier how incident-response expenses and extortion payments would actually be funded.

2. The Coverage You Have to Ask For

Most cyber insurance operates in what’s known as the surplus lines market, which gives insurers more flexibility than standard, state-approved policies.

That flexibility cuts both ways: it lets carriers adjust quickly as risk changes, but it also means some of the most useful protections aren’t offered automatically. They exist, but only for the businesses that know to ask.

Kroger calls this the hidden menu. It can include things like a special endorsement that extends coverage to AI-assisted work, a provision that reinstates your full limit after a claim instead of leaving you with whatever’s left over, or a waived deductible if you already had strong safeguards like multi-factor authentication in place.

*None of this shows up if you never ask. It’s usually known only to the people inside the insurance company and the brokers who work with them closely, which means the businesses getting the best terms aren’t necessarily the most careful ones. They’re the ones who knew what to ask for.

A Gap That’s Easy to Underestimate

Part of why coverage gaps catch people off guard is that cyber risk still doesn’t feel as tangible as more familiar risks. Businesses that install sprinkler systems and pay for comprehensive property coverage without a second thought will often hesitate over the cost of stronger cyber protection or a more complete policy — even though, as Kroger put it, most organizations are more likely to face a cyber incident than a fire at their building.

That’s not a reason to panic, though. It’s just a very real reason to treat cyber insurance the same way you’d treat any other real risk to the business: worth investing in and worth understanding its details.

Where to Start

You don’t need to become an insurance expert to close this gap, of course. But you need one afternoon, your actual policy, and a short list of the right questions.

We put together a worksheet to help with exactly that: Questions You Should Ask Before, During, and After a Cyber Incident.

It walks through what to ask your broker now, how your own team should be prepared to respond internally, and what’s worth reviewing once an incident is behind you. You can find it, along with our other cybersecurity resources, in our Tools & Guides drop down.

If you want to hear the full conversation with Travis Kroger, including what a good claim looks like from the inside, and where most businesses get under insured without realizing it, you can listen to the episode wherever you stream or watch on our YouTube channel.

And if you’ve read your policy and still have questions, we’re happy to be a sounding board.