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What You Think Your Cyber Insurance Covers... Probably Doesn’t

What You Think Your Cyber Insurance Covers... Probably Doesn’t

July 22, 20253 min read

If you’re like most small business owners we talk to, you probably have cyber insurance—or at least assume you’re covered by your general business policy. But here’s the truth: most policies are full of exclusions that can leave you exposed when it matters most.

Cyber insurance isn’t a silver bullet. It’s a safety net. But if you haven’t evaluated your policy with someone who knows how to align technical protections with carrier requirements, there’s a good chance that your claim could be denied when you need it most.

Let’s walk through what you need to know to avoid that outcome.


Why Cyber Insurance Matters Now More Than Ever

Hackers are shifting focus to small and mid-sized businesses. In fact, 43% of all cyberattacks now target businesses with under 500 employees. And the average cost of a breach for a small business? $2.98 million.

That’s not just a bill. That’s a potential business-ending event.

Good cyber insurance can help cover the financial damage, meet regulatory requirements, and support recovery.

But here’s the problem: most business owners don’t understand what their policy actually covers.


First-Party Coverage vs. Third-Party Liability: Know the Difference

First-party coverage protects your business directly. This can include:

  • Breach response costs (investigation, legal guidance, customer notification, credit monitoring)

  • Business interruption (lost revenue due to downtime)

  • Cyber extortion (ransomware payments and negotiation support)

  • Data restoration (recovery services and backups)

  • Reputation management (PR firms, customer communication, brand protection)

Third-party liability kicks in when others are affected:

  • Privacy liability (legal costs and settlements if customer data is exposed)

  • Regulatory defense (responding to investigations or fines)

  • Media liability (if content from a breach leads to defamation or copyright issues)

  • Defense and settlement costs (lawsuits from clients, vendors, or partners)


What Your Cyber Policy Probably Doesn’t Cover

Here’s where it gets tricky. Many policies exclude the very things business owners think are covered:

  • Negligence or poor cyber hygiene (like not using MFA or skipping software updates)

  • Incidents in progress before policy activation (Already have a breach but don't know it yet? Then you are NOT covered!)

  • State-sponsored attacks (some insurers label these "acts of war")

  • Insider threats (malicious employee actions)

  • Future lost business or long-term reputation damage

If you’re not actively documenting and maintaining basic cybersecurity protections, your claim could be denied.


Optional Coverage You Might Want to Add

Depending on your business type, you might want to consider:

  • Social engineering fraud (phishing and fake wire transfer scams)

  • Hardware "bricking" (when malware physically destroys devices)

  • Technology errors and omissions (E&O) (especially for IT providers or SaaS firms)


How to Choose the Right Policy

  • Assess your risk — What data do you store? Who has access? How tech-dependent are you?

  • Ask smart questions — Does this cover ransomware? What about insider threats or phishing?

  • Know your limits and deductibles — Can you afford the out-of-pocket cost?

  • Read the fine print — Understand what’s excluded and when.

  • Review annually — Threats evolve. Your policy should too.


Final Thought

Cyber insurance can be a powerful part of your risk management strategy—but only if you understand what it does and doesn’t cover.

At qnectU, we help business owners bridge the gap between technical readiness and insurance requirements, so they’re not left scrambling when something goes wrong.

Need help reviewing your policy or hardening your systems to meet insurance standards? Let's talk!

📅 Click here to schedule a quick 26-minute call today.


Article adapted with permission from https://thetechnologypress.com/decoding-cyber-insurance-what-policies-really-cover-and-what-they-dont/

cyberattackscyber insuranceData restorationprotectionqnectUcyber liabilityinsurance claim
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Greg Mauer

Gregory Mauer is the founder and CEO of qnectU, a best-selling author, speaker, and a cybersecurity & compliance expert. He has been on stage with the likes of the “Nice Shark”, Robert Herjavec, Siri co-founder Adam Cheyer, and business coach and author, Mike Michalowicz.

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Frequently Asked Questions

Do you offer access to senior IT consultants or a vCSO for oversight and guidance? 

Yes, we offer access to senior IT consultants and provide vCSO(Virtual Chief Security Officer) as a service for our clients. Our vCSO service provides your organization with expert leadership and strategic direction tailored to your unique cybersecurity and legal compliance needs. We are here to help you navigate the complexities of cybersecurity and ensure that your security posture is robust, compliant, and capable of addressing evolving cyber threats. Book a call today to get expert help with your company’s cybersecurity and compliance.

Do you have a high level of confidence in your security posture? If so, can you explain why?

We have a high level of confidence in the security posture of our company and our clients. Our security stack includes several components to ensure strong and resilient cybersecurity measures. We provide comprehensive risk management, regular audits and assessments, advanced security technologies, employee training and awareness, and incident response planning. Our systems and solutions follow established industry standards and best practices to keep your company safe and your data secure. Since every company has different risks depending on the data, systems, utilization, and more, we can work with your team to develop a robust security plan and implement the proper measures as needed. Reach out today to strengthen your company’s security posture!

Do you have a Disaster Recovery (DR) plan? If so, what’s in place? Is it tested regularly?

We provide robust Disaster Recovery (DR) plans, covering preventative, detective, and corrective measures. Our DR strategies are tailored to each client’s specific needs and are designed to ensure rapid recovery and continuity of operations in the event of any disaster. These plans are regularly reviewed and tested to guarantee they function effectively and meet the highest standards of resilience and reliability. And if a disaster were to occur outside of regular business hours, we have you covered! At qnectU, we have a response time of mere minutes for emergency after-hours calls, ensuring a rapid response to implement your Disaster Recovery plan. Book a call today to protect your company in the event of a disaster.

Do you perform regular risk assessments?

Here at qnectU, we conduct regular risk assessments as a core part of our risk management strategy. Our process is comprehensive, involving identification, categorization, and response planning for potential security risks, including technical vulnerabilities, access controls, and more. These assessments help us understand, control, and mitigate all forms of cyber risk, ensuring that our security measures are effective and up-to-date. But most importantly, we provide continual risk assessments at pre-determined intervals based on your company’s risk level. This ensures that issues are corrected, new risks are identified, and compliance is properly documented. Want to see how our in-depth business risk assessments work? Book a consultation today to get an in-depth risk assessment of your company’s current network security.

Do you follow proven change management principles? 

We are committed to following proven change management principles. We understand the importance of structured and systematic processes in implementing changes that affect cybersecurity protocols and IT environments. Our approach is based on industry-recognized frameworks and methodologies that ensure changes are managed effectively, focusing on minimizing risks, enhancing security posture, and achieving strategic objectives.

Do you address all my compliance needs, including HIPAA?

We specialize in Compliance as a Service (CaaS), and our program is designed to meet a wide range of regulatory requirements to ensure that your business adheres to the highest standards of compliance. We demonstrate our compliance through detailed assessments, documentation, and third-party audits. Our expertise and ongoing support can give you confidence that your company’s sensitive information is managed securely and in full compliance with all regulations.

Is third-party auditing provided to ensure cybersecurity and compliance requirements are being met?

In today’s world a business can easily be compromised via a “supply chain hack.” There have been several instances where the IT company has exposed all of their clients to hacking due to their own lack of cybersecurity measures. In order to prevent this within our own company, we work closely with a third party for comprehensive auditing services to ensure that all cybersecurity and compliance requirements are met. Our rigorous audit process involves a thorough examination of our systems and practices against established industry standards and best practices. This collaboration provides an objective perspective and deep expertise to identify any potential vulnerabilities, ensuring that our cybersecurity measures are robust, up-to-date, and in full compliance with regulatory demands.

What is Compliance as a Service (Caas)? 

Compliance as a Service (Caas) means that our experts will give you specialized help in handling all the rules and regulations your business needs to follow. We do this by providing expert guidance to help you determine what rules apply to your business and how to follow them. All while giving ongoing support to monitor your compliance status and updates in regulations. This may also include any advanced tools to help manage compliance tasks and risk management surrounding compliance. CaaS takes the hassle out of compliance so you can focus on running your business with confidence.

Who is Greg Mauer? 

Gregory Mauer is the founder and CEO of our company, a best-selling author, speaker, and a cybersecurity & compliance expert. He has been on stage with the likes of the “Nice Shark”, Robert Herjavec, Siri co-founder Adam Cheyer, and business coach and author Mike Michalowicz.

Answers To Common Questions

Frequently Asked Questions

Do you offer access to senior IT consultants or a vCSO for oversight and guidance? 

Yes, we offer access to senior IT consultants and provide vCSO(Virtual Chief Security Officer) as a service for our clients. Our vCSO service provides your organization with expert leadership and strategic direction tailored to your unique cybersecurity and legal compliance needs. We are here to help you navigate the complexities of cybersecurity and ensure that your security posture is robust, compliant, and capable of addressing evolving cyber threats. Book a call today to get expert help with your company’s cybersecurity and compliance.

Do you have a high level of confidence in your security posture? If so, can you explain why?

We have a high level of confidence in the security posture of our company and our clients. Our security stack includes several components to ensure strong and resilient cybersecurity measures. We provide comprehensive risk management, regular audits and assessments, advanced security technologies, employee training and awareness, and incident response planning. Our systems and solutions follow established industry standards and best practices to keep your company safe and your data secure. Since every company has different risks depending on the data, systems, utilization, and more, we can work with your team to develop a robust security plan and implement the proper measures as needed. Reach out today to strengthen your company’s security posture!

Do you have a Disaster Recovery (DR) plan? If so, what’s in place? Is it tested regularly?

We provide robust Disaster Recovery (DR) plans, covering preventative, detective, and corrective measures. Our DR strategies are tailored to each client’s specific needs and are designed to ensure rapid recovery and continuity of operations in the event of any disaster. These plans are regularly reviewed and tested to guarantee they function effectively and meet the highest standards of resilience and reliability. And if a disaster were to occur outside of regular business hours, we have you covered! At qnectU, we have a response time of mere minutes for emergency after-hours calls, ensuring a rapid response to implement your Disaster Recovery plan. Book a call today to protect your company in the event of a disaster.

Do you perform regular risk assessments?

Here at qnectU, we conduct regular risk assessments as a core part of our risk management strategy. Our process is comprehensive, involving identification, categorization, and response planning for potential security risks, including technical vulnerabilities, access controls, and more. These assessments help us understand, control, and mitigate all forms of cyber risk, ensuring that our security measures are effective and up-to-date. But most importantly, we provide continual risk assessments at pre-determined intervals based on your company’s risk level. This ensures that issues are corrected, new risks are identified, and compliance is properly documented. Want to see how our in-depth business risk assessments work? Book a consultation today to get an in-depth risk assessment of your company’s current network security.

Do you follow proven change management principles? 

We are committed to following proven change management principles. We understand the importance of structured and systematic processes in implementing changes that affect cybersecurity protocols and IT environments. Our approach is based on industry-recognized frameworks and methodologies that ensure changes are managed effectively, focusing on minimizing risks, enhancing security posture, and achieving strategic objectives.

Do you address all my compliance needs, including HIPAA?

We specialize in Compliance as a Service (CaaS), and our program is designed to meet a wide range of regulatory requirements to ensure that your business adheres to the highest standards of compliance. We demonstrate our compliance through detailed assessments, documentation, and third-party audits. Our expertise and ongoing support can give you confidence that your company’s sensitive information is managed securely and in full compliance with all regulations.

Is third-party auditing provided to ensure cybersecurity and compliance requirements are being met?

In today’s world a business can easily be compromised via a “supply chain hack.” There have been several instances where the IT company has exposed all of their clients to hacking due to their own lack of cybersecurity measures. In order to prevent this within our own company, we work closely with a third party for comprehensive auditing services to ensure that all cybersecurity and compliance requirements are met. Our rigorous audit process involves a thorough examination of our systems and practices against established industry standards and best practices. This collaboration provides an objective perspective and deep expertise to identify any potential vulnerabilities, ensuring that our cybersecurity measures are robust, up-to-date, and in full compliance with regulatory demands.

What is Compliance as a Service (Caas)? 

Compliance as a Service (Caas) means that our experts will give you specialized help in handling all the rules and regulations your business needs to follow. We do this by providing expert guidance to help you determine what rules apply to your business and how to follow them. All while giving ongoing support to monitor your compliance status and updates in regulations. This may also include any advanced tools to help manage compliance tasks and risk management surrounding compliance. CaaS takes the hassle out of compliance so you can focus on running your business with confidence.

Who is Greg Mauer? 

Gregory Mauer is the founder and CEO of our company, a best-selling author, speaker, and a cybersecurity & compliance expert. He has been on stage with the likes of the “Nice Shark”, Robert Herjavec, Siri co-founder Adam Cheyer, and business coach and author Mike Michalowicz.

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