Cyber Insurance is Broken (and Here's Where You're Most Exposed)

Cyber insurance used to be a checkbox. Now it’s a lifeline.But here’s the kicker: even companies with coverage are often flying blind. Policies look solid—until you actually need to file a claim. That’s when the real bugs show up… and they’re not the kind your SOC team can patch.

At Execurisk, we’ve seen it all. Below are the most common (and costly) gaps in cyber insurance policies, plus what to do about them before you find out the hard way.

Exclusion #1: “Acts of War” (aka the Universal Get-Out-of-Paying-Free Card)

Why it exists: Insurers don’t want to cover nation-state attacks.

Why it matters: Today’s ransomware crews? Many have government affiliations. If your breach even smells like geopolitics, your claim might get denied.

How to fix it: Push for a policy with narrow and clearly defined war exclusions—or none at all. Ask about “attribution language” (and bring a broker who knows how to negotiate it).

Exclusion #2: “Voluntary Transfer” Clauses

Why it exists: To deny coverage when someone in your company is tricked into sending money to a fraudster.

Why it matters: That’s literally the most common cyber crime today. If you’re hit by a Business Email Compromise (BEC) scam and your controller wires $200K to a fake vendor, your insurer could say, “Well, they volunteered.”

How to fix it: Look for social engineering coverage with minimal sublimits (ideally $250K+), and no “voluntary parting” language.

Exclusion #3: Retroactive Dates That Cut Too Deep

Why it exists: To limit exposure to “pre-policy” threats.

Why it matters: Most breaches live in your systems for months before you even notice them. If your policy only covers incidents that start after the retro date, you’re out of luck.

How to fix it: Always ask for full prior acts or a backdated retroactive date. Especially if you’re switching carriers.

Coverage Gap: Regulatory Fines That Aren’t Covered (Oops.)

Why it exists: Not all jurisdictions allow insurance to cover fines.

Why it matters: When the FTC or SEC comes knocking, the penalties can hurt. Same for GDPR and state AGs.

How to fix it: Ask whether your policy covers regulatory defense and the fines themselves where legally permissible. Look for language about “civil money penalties.”

Coverage Gap: Weak Incident Response Support

Why it exists: Some carriers keep response panels as short as their patience.

Why it matters: Your coverage includes breach coaches, PR firms, forensic specialists. But if you can only use their B-team vendor, you may regret it.

How to fix it: Look for flexible breach response panels, or ask to pre-approve your preferred vendors. Time matters in a breach, and so does quality.

Coverage Gap: No Coverage for Reputational Harm

Why it exists: Soft costs are tricky to quantify.

Why it matters: A breach can tank your brand and your revenue, even if your systems are back up.

How to fix it: Some cyber policies now offer coverage for business interruption and loss of future revenue due to reputational damage. Ask about it. Push for it.

Bonus: Don’t Forget Executive Risk Overlap

Cyber attacks often lead to shareholder lawsuits, board investigations, and even regulatory scrutiny of leadership. Sound like a D&O problem? It is.

So make sure your D&O and cyber insurance work together, not against each other. Spoiler: we help with that too.

Final Word: Cyber Policies Are Not Created Equal

Cyber insurance isn’t just about having a policy; it’s about having the right one. One that holds up when you’re staring down a ransom note or a lawsuit from a client whose data got leaked.

At Execurisk, we specialize in sniffing out gaps before they become front-page news. We work with high-growth companies, tech founders, and CFOs who understand that cyber risk isn’t just an IT issue; it’s a board-level exposure.

Get a second opinion on your cyber coverage.(Your current broker won’t mind. Probably.)👉 Schedule a free audit or email us at info@execurisk.com