How to Meet Cyber Insurance Requirements (and Avoid Denied Claims)

As cyberattacks surge and premiums skyrocket, cyber insurance has shifted from a nice-to-have to a business-critical safeguard. But having a policy isn’t enough – to qualify for coverage, reduce costs, and ensure claims are paid, organizations must meet a growing list of cybersecurity requirements. The global cybersecurity insurance market is expected to reach $13.6B in 2025, with more than 80% of organizations already covered and 1 in 5 increasing their policy limits in the last year.

The rising popularity of cyber insurance matches surging ransomware attacks and tightening regulations, leaving security teams under pressure to implement proactive cybersecurity strategies.

It’s not just about getting covered – it’s about staying covered when it counts, and keeping premiums down. We’ll break down cyber insurers’ most common requirements, unpack why they’re tightening the reins, and share tips to simplify cyber insurance compliance.

What Is Cybersecurity Insurance?

Cybersecurity insurance, also called cyber insurance or cyber liability insurance, helps organizations recover from the financial and operational fallout of a cyberattack. Cyber insurance helps organizations recoup costs related to forensic investigations, customer notifications, legal fees, and more.

What Does Cybersecurity Insurance Cover?

Specific coverage varies across cybersecurity insurance policies; broadly speaking, it breaks down into two categories:

First-Party Coverage

First-party cyber coverage is designed to protect an organization’s data, including employee and customer information. Coverage here typically includes costs spanning:

• Legal counsel to determine notification requirements and regulatory obligations
• Public relations and crisis management to safeguard brand reputation
• Income lost because of business interruption
• Breach investigation and any resulting fees, fines, or penalties
• Costs related to cyber extortion and fraud

Third-Party Coverage

Third-party cyber coverage protects organizations from liability in case a third party brings a claim following a cyber incident. In this category, coverage generally includes:

• Payments to individuals impacted by the breach
• Defamation-related losses
• Legal costs related to claims, settlements, or regulatory inquiry responses

While many of these areas are standard to cyber insurance policies, the full scope of coverage – and the cost of insurance premiums – increasingly depends on how well an organization demonstrates cyber hygiene.

Cybersecurity Insurance Requirements: What Carriers Expect

Like any type of insurance policy, cyber coverage hinges on compliance with certain pre-defined expectations, often including both technical security controls and operational best practices.

Core Cyber Insurance Requirements

Just as auto insurers might hesitate to offer full coverage for a car with a salvage title, cyber insurers are wary of covering organizations with pre-existing security vulnerabilities. To demonstrate an acceptable security posture, organizations are increasingly required to prove they’ve implemented key security controls as a prerequisite for cyber coverage.

Multi-Factor Authentication (MFA)

Stolen or compromised credentials remain the number one attack vector for data breaches globally, so it’s easy to see how MFA has the potential to prevent over 90% of cyber insurance claims – and just as easy to understand why so many cyber insurance providers consider MFA non-negotiable.

Cyber insurance may require MFA for:

• Third-party access to internal systems
• Admin account logons
• Privileged protocols like RDP, SSH, and WinRM

Network Segmentation

More than 80% of organizations carry cyber insurance today – of that group, nearly 70% say their cyber insurance provider requires network segmentation. Because flat networks make it easy for adversaries to expand their attack surface, many underwriters require organizations to implement segmentation that:

• Prevents lateral movementto limit the scope of a compromise
• Protects sensitive systems and accelerates breach containment
• Demonstrates alignment with standards like the NIST cybersecurity framework (CSF)

Identity-Based Access Controls

Role-based access and least privilege enforcement are critical to cutting out excessive permissions and limiting lateral movement by default. To reduce the risk of stolen or misused credentials, insurers expect organizations to demonstrate:

• Access policies tied to business need
• Routine reviews and privilege reductions
• Up-to-date logging of who accessed what, and when

Incident Response Plans

Incident response (IR) planningreduces the average cost of a data breach by nearly $250,000; this practice assures cyber insurance carriers that an organization is prepared to detect, contain, and recover from a cyber incident. To confirm this requirement has been satisfied, insurers may ask for:

• Copies of IR plans
• Proof of tabletop exercises or red team tests

Ongoing Risk Management Expectations

Beyond technical controls, many cybersecurity insurers look for operational practices that help minimize risk and insulate against cyber threats.

Regular Network Security Audits and Assessments

When issuing or renewing policies and setting premiums, cyber insurance underwriters may look for regular risk assessments, internal and third-party penetration testing, and continuous monitoring of network activity. Strategies like these signal an organization’s commitment to continuously improving security.

Cybersecurity Training Regimen

While the risk of human error can’t be remedied entirely, organizations can minimize this vulnerability with phishing simulations, cybersecurity awareness training, and clearly documenting security policies. Even if these tactics aren’t strictly required by cyber insurers, they can prove valuable for lowering premiums.

Third-Party Controls

Almost one-third of breaches were linked to third-party involvement in 2024 – twice as many as the previous year – yet 73% of organizations say their third parties have more network access than they did three years ago. To address this evolving threat, insurers may want to see proof of risk-based vendor vetting or strategies that scale granular access controls to third parties.

Why Are Cyber Insurance Requirements Rising?

As sophisticated cyberattacks grow more common and more costly, insurers faced with rising payouts are forced to raise premiums (with some carriers hiking costs by as much as 50% in recent years) or tighten requirements.

Notably, the rising cost of cyberattacks may actually be due, in part, to the growing popularity of cyber insurance. Research suggests that organizations are now paying ransomware more often since their insurer will often reimburse those costs; some ransomware strains even ask defenders to share cyber policy details before calculating payout demands.

To stay solvent in an era of rising cyber threats, insurers have no choice but to implement requirements that shift the market from reactive coverage to proactive risk management.

Consequences of Non-Compliance with Cyber Insurance Requirements

Organizations that fall short of cyber insurers’ expectations may face:

• Denied claims: Insurers may reject coverage if MFA, segmentation, IR plans, or other core requirements weren’t in place when the breach occurred.
• Reduced payouts: Missing controls could mean only partial reimbursement of covered costs.
• Higher premiums or exclusions: Even if you qualify for cyber coverage, a lack of full compliance with best practices increases costs and limits your coverage scope.
• Loss of renewal: In some cases, non-compliance may disqualify you entirely from future coverage.

A Unified Platform for Cyber Insurance Compliance

Meeting every cybersecurity insurance requirement with siloed tools is resource-intensive and error-prone. With a unified platform, Zero Networks simplifies the path to compliance by delivering:

• Effortless microsegmentation: With automated tagging, grouping, and policy creation and enforcement, Zero makes it easy to segment every asset in record time.
• Identity-based access controls: Enforcing least privilege across users, admins, and service accounts with identity segmentation, Zero Networks helps organizations neutralize identity threats and stop privileged account abuse.
• Network-layer MFA: Protect every port, protocol, and application with just-in-time MFA to proactively block lateral movement.
• Secure third-party connections: Minimize third-party risks and enforce custom policies with Zero Trust Network Access (ZTNA).

By centralizing policy enforcement and supporting a resilient architecture that instantly contains breaches, Zero Networks accelerates comprehensive compliance and reduces your cyber insurance risk profile – all without increasing operational complexity. Take a self-guided product tour to explore how Zero makes cyber insurance compliance fast and frictionless.