Posted by: Aubrey Felix on April 9, 2025 at 8:14 am
Cyber insurance isn’t just for large corporations anymore—it’s becoming a necessity for small and medium-size businesses, too. Ransomware attacks, data breaches, and phishing scams are always on the rise, so many companies are turning to insurance for peace of mind. But is there a catch? Yes. having a policy doesn’t mean you’re automatically covered.
If your business isn’t compliant with basic cybersecurity standards, your cyber insurance claim could be denied. Let’s look at how compliance and cyber insurance are connected, and what you can do to make sure your business is protected. Keep in mind, these are just basics. Always check with your cyber insurance provider.
The Fine Print: How Non-Compliance Can Void Your Claim
Cyber insurance providers are tightening their requirements. If you experience a cyber incident and didn’t follow key security practices, you could be denied. Common compliance failures that lead to this are:
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No multi-factor authentication (MFA)
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Unpatched software or outdated systems
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Lack of regular risk assessments
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No employee cybersecurity training
Skipping the basics could cost you—big time.
Common Cybersecurity Requirements in Insurance Policies
Most cyber policies now include minimum security requirements you need to maintain coverage. These could include:
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Endpoint protection and firewalls to block threats
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MFA to prevent unauthorized access
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Regular data backups stored offsite
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Employee training to spot phishing and social engineering
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Incident response plans for quick action when things go wrong
Even if these steps aren’t explicitly required in your policy, they can strengthen your position if you ever need to file a claim.
How to Stay Compliant (and Insurable)
So how can you make sure you’re meeting expectations? Start by aligning with recognized cybersecurity frameworks. Some of the most common ones are:
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CIS (Center for Internet Security) – Offers practical controls for small businesses
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CMMC (Cybersecurity Maturity Model Certification) – Required for government contractors
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NIST 800-171 – Applies to any organization handling Controlled Unclassified Information (CUI)
These frameworks help businesses of all sizes understand what “secure” looks like and how to achieve it.
Steps to Take Before Purchasing Cyber Insurance
Before you sign on the dotted line, make sure your cybersecurity posture supports the coverage you’re paying for. Here’s a quick checklist:
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Conduct a cybersecurity risk assessment to find gaps
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Implement or update security policies and procedures
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Ensure technical safeguards like MFA and backups are in place
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Train your team to avoid common threats
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Review the fine print of any policy with a qualified advisor
Conclusion
Cyber insurance is a smart move—but not a substitute for solid cybersecurity. Insurers are placing more responsibility on businesses to protect their data. Meeting compliance standards not only helps your claim go through, it could keep you from needing to file one in the first place.
Not sure where to start? TAZ Networks helps businesses throughout Southeast Michigan align their IT with compliance and cyber insurance requirements. Reach out today to schedule your consultation.