Cyber Insurance Claims Are Being Denied – Here’s Why

“We thought we were covered… until we weren’t.”

It’s a phrase we hear all too often. Organizations are increasingly investing in cyber insurance as a safety net for ransomware attacks, data breaches, and business disruptions. But there’s a growing trend that should alarm every security leader: insurance claims are being denied. Even after paying premiums and assuming compliance, many businesses are left holding the bag when incidents occur.

So why are insurers turning down claims?

The Top Reasons Cyber Insurance Claims Are Denied

Cyber insurers are no longer writing blank checks. They’ve tightened requirements, scrutinize security posture more deeply, and reject claims where basic protections are missing. Here are some of the most common denial reasons we see:

1. No Multi-Factor Authentication (MFA)

MFA is one of the most effective ways to stop account takeovers. If your systems including email, VPNs, and cloud services do not have MFA enforced, insurers may consider your security controls insufficient and deny your claim.

2. Lack of Logging and Monitoring

Without proper logging and detection capabilities in place, it’s often impossible to determine what happened during a cyberattack. If your organization can’t produce logs that show how an incident unfolded, insurers may argue that your environment was unprepared and deny coverage.

3. Unpatched or Outdated Systems

If you’re running systems with known vulnerabilities—and those weaknesses were exploited—expect trouble. Insurers often require proof that security patches are applied in a timely manner. Failure to maintain a strong patch management program is a major red flag.

4. Missing Incident Response Plans

Many policies require a formal incident response plan. Without documented procedures or tested playbooks, you may be viewed as negligent in your preparations, resulting in claim denials or policy non-renewals.

5. Incomplete or Inaccurate Application Disclosures

If your cyber insurance application includes outdated or inaccurate information about your security posture, that can be grounds for denial. Transparency matters. A security lapse that contradicts what was originally disclosed can render the policy void.

 How Movaci Helps You Stay Insurable

At Movaci, we help organizations close the cyber insurance readiness gap before it costs them. Our clients come to us for proactive support that makes insurers and auditors confident in their risk posture.

Here’s how we help ensure your claim won’t be the one that gets denied:

• MFA Everywhere: We ensure strong authentication is enforced across all user accounts, remote access portals, and cloud environments.
• Security Monitoring & Logging: Our 24/7 security operations team provides logging, detection, and incident analysis that stand up to insurance scrutiny.
• Patch Management: We help clients stay current with critical and high-priority patches, and document compliance.
• Incident Response Preparedness: We develop and test IR plans so your team is ready and your policy remains valid.
• Audit-Ready Documentation: From endpoint security to backup configurations, we help you prove compliance at renewal and after an event.

Conclusion

Cyber insurance is a critical layer of protection—but it’s not a guarantee. As insurers raise the bar, organizations must elevate their security posture to meet and exceed evolving standards. Denied claims are avoidable, but only when businesses take a proactive approach to compliance, visibility, and preparedness.

At Movaci, we believe the best time to ensure you're insurable is before the breach. Whether you're concerned about your current policy or preparing for a renewal audit, our team is here to help you stay covered—with confidence. Contact Us today for our team to assess your cyber insurance readiness.