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Cybersecurity Glossary

What is Cyber Insurance?

Cyber insurance is a policy that covers financial losses from cybersecurity incidents — ransomware payments, data breach response, business interruption, regulatory fines, and third-party liability. Increasingly, insurers require specific security controls (MFA, EDR, backups) before issuing or renewing coverage.

Blocks 99% of password attacks
Required by most cyber insurance
Core to SOC 2, HIPAA, PCI
How It Works

How Cyber Insurance works

Three-step view of how it operates in practice.

1

Assess exposure

Understand your risk: data volumes, revenue dependency, regulatory obligations, customer contracts requiring coverage.

2

Demonstrate controls

Complete the insurer’s questionnaire honestly. MFA, EDR, backups, IR plan, and training are baseline.

3

Renew annually

Controls must be maintained. Premiums reflect your security posture at renewal.

Cyber Insurance Variants

Coverage categories

A clear breakdown of the common variants.

Coverage

First-party

Your own losses: ransomware, business interruption, data restoration, notification costs.

Most common

Third-party

Time-based one-time codes from an app like Microsoft Authenticator or Google Authenticator. Offline-capable and phishing-resistant against many attacks.

Convenient

Social engineering

The user approves a sign-in with a tap on their phone. Easy to use but vulnerable to MFA fatigue attacks — always pair with number matching.

Strongest

Reputational harm

FIDO2 keys like YubiKey, or device-bound passkeys. Phishing-resistant by design — the key will not authenticate against a fake domain.

Why It Matters

Why Cyber Insurance matters for SMBs

Cyber insurance is a policy that covers financial losses from cybersecurity incidents — ransomware payments, data breach response, business interruption,…

83%
of cyber insurance applications now require MFA, EDR, and tested backups as baseline controls
Source: Marsh Global Cyber Insurance Report, 2024
Pitfalls

Common Cyber Insurance mistakes

  • Misrepresenting controls on applicationInsurers actively audit claim-time. Controls you said you had but didn’t = claim denial.
  • Inadequate limitsAdmins, finance, and anyone with access to money or sensitive data should use an app or hardware key — never SMS alone.
  • No IR retainer integrationMost policies require using the carrier’s preferred IR vendors. Knowing this before an incident saves critical hours.
  • Skipping renewalsYear-over-year, insurers ask more. If controls haven’t kept pace, renewal may be denied or sub-limited.
Common Questions

Cyber Insurance frequently asked questions

For SMBs, $1K-$10K annually per $1M of coverage. Heavily dependent on industry, revenue, and control maturity.
Baseline: MFA (especially on email and remote access), EDR on all endpoints, tested immutable backups, IR plan, security awareness training, patching discipline.
Usually yes, but with sub-limits and documentation requirements. OFAC sanctions complicate payments to certain threat actor groups.
Pre-existing conditions (incidents already in progress), nation-state attacks (varies), infrastructure outages (not caused by cyber), intentional acts, and fines considered uninsurable by jurisdiction.
Have a documented recovery process before it happens. Typically an administrator verifies the user's identity through an out-of-band channel, temporarily disables MFA, and re-enrolls the user with a new device. Backup codes or a secondary security key reduce downtime.
Related Services

LogicalNet services related to MFA

Identity & Access Protection Primary

MFA enforcement, conditional access, least privilege, and identity monitoring.

Email Security

Phishing defense, account-takeover monitoring, and secure email gateways.
Related Terms

Related glossary terms

MFA

Policies that adapt to device, location, and risk signals.

EDR

A security model that verifies every request as if it came from an open network.

Immutable Backup

Give users only the access they need — nothing more.

Incident Response

FIDO2 keys and passkeys that cannot be proxied or replayed.
Identity & Access

Cyber insurance application coming up?

Talk to a LogicalNet identity expert. We will review your current environment, recommend the right MFA methods for each group of users, and help you deploy without disrupting the business.

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